Fulgent Genetics, Inc.

Good day and welcome to the Q1 2022 Fulton Genetics Earnings Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Nicole Borja. Please go ahead, ma'am.

Great, thanks. Good afternoon and welcome to the Fulton Genetics First Quarter 2022 Financial Results Conference Call. On the call today are Ming Hsieh, Chief Executive Officer, Paul Kim, Chief Financial Officer, Dr. Larry Weiss, 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, bulgentgenetics.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 than 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 four 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 31st, 2021, 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 policies 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 first quarter of 2022 for more information, including the description of how the company calculates non-GAAP income and income per share and a reconciliation of these financial measures income and income per share the most directly comparable GAAP financial measures. With that, I'd now like to turn the call over to Meng.

Thank you very much, Nicole. Good afternoon, and thank you for joining our call today to discuss our first quarter 2022 results. We had a very good start to the year in terms of financial results, as well as some exciting strategic announcements. I will cover some highlights from the quarter before taking the call over to our Chief Commercial Officer, Brandon Perthes, to discuss products and go-to-market updates. Then Dr. Larry Weiss will provide an update on our CSI expansion strategy. Finally, Paul will cover our financial results and outlook in detail. Taking a look at our first quarter results, which again exceeded our guidance for both core and COVID revenue. Revenue totaled at $320 million, down 11%, worth $359 million in the first quarter last year, and up 27% compared to fourth quarter of 2021. We delivered approximately 3.2 million tests in the quarter, up about 31% compared to the fourth quarter of 2021, though down from 3.8 million in the fourth quarter of last year. The volatility we have seen in total revenue is a direct result of the fluctuating demand environment for COVID testing. which was again strong in the first quarter, but seems cold meaningfully in the second quarter. Paul will cover the breakdown between our core and the COVID business in more detail. But on a highlight level, our core business grow 59% year over year to 25 million. We continue to drive a strong profitability and generated $4.93 per share in GAAP EPS and $188.4 million in operating cash flows in the quarter. We had a strong start to the year with the first quarter results that exceeded our expectations. At the same time, we are most excited about the strategic update we announced most recently. This includes acquisition of informed diagnostics, which closed just last week, and the opening of our new oncology lab in Southern California, which we announced today. As the demand environment for COVID-19 continues to cool off, our team is much busier than ever working on a growing number of initiatives that will drive long-term sustainable growth for our core genetic testing business. Brandon will cover our strategy around informed diagnostic in more detail, but this acquisition is our largest today. and create a meaningful expansion opportunity for full-gen while adding our top line on day one. There are multiple compelling strategy benefits of this acquisition, including commercial infrastructure they have built to support a nationwide footprint, which give us a seamless entry point to sell full suite of full-gen testing services, including newly launched liver cancer liquid biopsy tests. We see this acquisition as highly complementary to our existing test menu and Salesforce and believe the investment can drive meaningful return for our core business over the long term. The second initiative I would like to highlight is opening our new oncology folks lab in Southern California. This new lab give us an opportunity to bring lab and oncology testing capabilities that we acquired with CSI to our clients on the West Coast. We look forward to scaling our capabilities across cancer testing to our West Coast customer base. Dr. Weiss, who has been overseeing the integration of CSI into 4GIN, will also oversee the operation of this lab. This announcement marked notable steps forward in our strategy to drive long-term sustainable growth in our core genetic testing business. A key element of success of this strategy is a team of experienced leaders within Fortune who are executing on this vision every day. We help build a relatively lean but extremely knowledgeable group of executives and vice presidents who have become instrumental to our success for execution. While the team has continued to grow in recent quarters, It remains a cohesive and highly effective group of leaders who are able to accomplish what they set out to do. Our rapid scaling of COVID testing during the pandemic is a prime example of the determination of our team. The acquisition and the integration of CSI Labs is another notable proof point of our ability to execute successfully on our merchant acquisition strategy. I have a high level of confidence that our team were able to effectively execute on the integration of informed diagnosis to drive outside growth in our core business in the years ahead. We'll continue to look and additional M&A opportunities in science, technology that could contribute to our long-term growth. We recognize that the valuation across the healthcare landscape have become even more attractive in the recent market volatility and remain extremely well-capitalized to take advantage of these opportunities as they arise. The future looks very bright for 4G. I am very excited about the growing number of opportunities we have to capitalize on in the near future. I now turn over the call over to Brandon Perthes, our Chief Commercial Officer. Brandon?