Fulgent Genetics, Inc.

Good day and welcome to the fourth quarter 2021 Fulgent Genetics earnings conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Nicole Borsha with Investor Relations. Please go ahead.

Great, thank you. Good afternoon and welcome to the Fulgent Genetics fourth quarter 2021 financial results conference call. On the call today are Ming Hsieh, Chief Executive Officer, Paul Kim, Chief Financial Officer, Dr. Larry Wise, Chief Medical 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, ultragenetics.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 four 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 the 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 Securities and Exchange Commission, including the previously filed 10-K for the year ended December 31, 2021, which is available on the company's Investor Relations website. Management's prepared remarks, including discussion 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 results for the fourth 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.

Thank you very much, Nicole. Good afternoon and thank you for joining our call today to discuss our fourth quarter 2021 results. We finished the year in a very strong note with continued growth in core revenue and re-acceleration in our COVID revenue. I will cover some of the highlights from the year and the fourth quarter before taking the call to our Chief Commercial Officer, Brandon Perthews, to discuss products and ongoing market updates. And Paul will discuss our financial results and outlook in detail. Take a look at our fourth quarter results, which exceeded our guidance in both core and COVID revenue. Revenue totaled at 252 million compared to 295 million in the fourth quarter last year, and up 10% compared to third quarter in 2021. We delivered approximately 2.5 million tests in the quarter, up 13% compared to third quarter 2021, and slowed down from 3.2 million in the fourth quarter last year. Paul will cover the breakout between our core and the COVID business in more detail in a moment. But on the highlight, our core business grew 234% year over year to $41 million. Strength in our core business was driven by the momentum across the key areas, including CSI, our JV in China, and the contribution from our NGS COVID contracts with the CDC. We continue to drive strong profitability. It generated $3.34 per share in GAAP EPS and $77.1 million in operating cash flow in the quarter. The first quarter capped the year with tremendous growth for Fortune. We finished the year with just shy of $1 billion in revenue, up 135% year-over-year, and generated $16.38 per share in GAAP EPS. and $538.6 billion in operating cash flow. 2021 was truly a transformative year for our business. What will always be genetic business at our core will now have a very wide pathway of opportunity to grow and expand our business. into new and exciting area of genomics. Leveraging large cash position, we have built over the last two years. We remain active in our COVID-19 test business as much demand dictates, but our long-term work vision for the company have never been more exciting with the opportunities We have evaluating and executing on the broader genomic testing market. The acquisition of CSI, Folgen's first significant acquisition, has become a bright spot of our business. We'll still have a very early stage of integrating the scaling, the operation, and the capabilities of CSI. but we feel very good about the early progress we had seen and the opportunity for the future. Our investment in helio health has also been good progress with the official launch of the HelioLiver, which is now commercially available in the U.S. exclusively through 4Gen Genetics. We are We're very early in learning our partnership with the Helio Health. The role of the Helio has only just beginning. We have additional development and the commercialization opportunities for the other disease with Helio in the future. We also announced the exciting strategic investment and the partnership with Spatial Genomics today. We believe Spatial is taking a novel and innovative approach to sick fish technology, and we look forward to adding their capability to our platform to further expand our portfolios of genome testing solutions. Brandon will elaborate on the progress of this initiative in a moment. As we look ahead, remaining focused on two areas to drive growth. The first is integrating and scaling our existing partnership with acquisitions, and the second is pursuing additional MA opportunities. We have a significant amount of dry powder at our disposal and plan to broaden and more aggressive on future acquisitions and partnership initiatives. As we look at the acquisition, we remain disciplined in our approach and are seeking generally the tangible ROIs and the driving real synergies while being efficient with the capital deployment. We have been very successful in executing our M&A strategy this year. As our acquisition of CSI and the investment HILO and the spatial genomics fit well within our M&A philosophy and we're very proud of what we accomplished in 2021. Our strategy to expand and grow our core business is playing out nicely as the access with our organizations are all performed well. We believe there is meaningful opportunity to expand into different areas in genomic testing and build a partnership that established our go-to one-stop shop for genomic testing needs for the future strategic move. Throughout the COVID pandemic, we have proven our ability to scale our operations and the infrastructure will support our customer through period of fluctuating demands. We are ideally suited to replicate this model in our core genomic testing business. We are really just getting started on this long-term opportunity in the growing market for genomic testing. The future is bright for 4G. We have a great team in place and have a momentum on our side as we head into 2022 and beyond. Now I'll turn over the call to Brandon Precious, our Chief Commercial Officer. Brandon.