Fulgent Genetics, Inc.

Good day and welcome to the Q2 2022 Fulton Genetics earnings conference call. As a reminder, today's call is being recorded. At this time, I would like to turn the conference over to Nicole Portia. Please go ahead, ma'am.

Great, thanks. Good afternoon and welcome to the Fulton Genetics second 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 Brennan 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, bulgingenetics.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 the 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 seems no obligation to update any of the forward-looking statements it may make today to reflect Actual results are changes in expectation. 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 the discussions of some risk factors that may cause results to differ from those described in 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 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 results for the second 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 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 second quarter 2022 results. We had a very good quarter as we continue to focus on execution and the growth of our core business. I will cover some highlights from the quarter before turning the call 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 the second quarter, the revenue of $125 million was in line with our guidance. However, Outperformance in our core business offset some softness in COVID-19 revenue, which we view as a net positive. We delivered over 1.3 million tests in a quarter, down about 14% compared to Q2 of last year. The decline in the test volume and the revenue is directly tied to the slowdown in COVID-19 testing, which came down materially relative to Q1 and the highs of 2021. Paul will cover the breakout between our core and the COVID-19 business in more detail. But on a high level, our core business has grown over 100% year over year to 45, a height of our guidance of $40 million. we continue to drive positive EBITDA and cash flow. Despite our increasing investments and generate 37 cents per share in GAAP EPS and 11.1 million in operating cash flow in the quarter. The second quarter was marked by successful acquisition of Informed Diagnostics, which closed in late April. Our team has been working diligently on a smooth integration of informed diagnostic business into Fulgine's platform. Brandon will cover this transition in more detail, but we are pleased with the early momentum we are seeing across the business. The platform we have built with informed diagnostics and CSI marks us unique suited to deliver a full suite of genomic testing capabilities to our biopharma clients. We have been building this sequencing as a service business over the last few years, and we see meaningful opportunity to continue expanding in operation in the years ahead. As a part of this effort, we brought on Dr. Gina Waller from Neogenomics where she runs their farmer service division. We are excited to welcome Gina to the 4GEN team and continue to have a great momentum attracting top industry talents to 4GEN as we further build on our capabilities and the footprint as a one-stop genomic testing platform. To that end, we are also pleased to announce the appointment of two new members to our board of directors. Dr. Michael Nohile and Dr. Leonard Post joined our board as of August 1st, 2022. Dr. Nohile is a highly respected scientist with extensive operational and R&D experience in both genetics and new drug discovery, coupled with a strong background in corporate strategy. Prior to his current role as CSO of Generated Biomedicine, Dr. Nohidi has various roles of increasing responsibility at Amgen, where ultimately oversaw a $4 billion R&D budget across multiple divisions. Dr. Post is an esteemed therapeutic industry veteran who has held board and advisory positions at multiple private health across the genetic and therapeutic industry. The addition of Dr. Nohidi and Dr. Post to our board with our relationships across the pharmaceutical and the biotech industry proved to be very valuable to as we expand further into the therapeutics opportunities in future. Their commitment to 4GEN is also a testament to the industry's increasing recognition of 4GEN as a respected contender in the genomic testing landscape. As we continue to build up on genomic testing capabilities to offer more comprehensive suite of services for customers, We also recognize the ability to apply our learning and expertise in NGS and genomics to the therapeutic industry. We see a number of opportunities to drive better treatment and patient outcomes, leveraging combination of our advanced testing capabilities and the biopharma relationship, which have continued to expand in recent quarters. We look forward to seeing more of this initiative in the quarters ahead. Overall, I'm very proud of the business that we have built and our team's ability to opportunistically execute to expand our business during the time that others in the industry are facing challenges and appearing back on operations. We have a consistent run fortune with a focus on efficiency and responsible, thoughtful investment. And this strategy has paid off meaningfully through the COVID-19 pandemic. Our philosophy has not changed, and we plan to drive long-term growth, profitability, leveraging our differentiated technology platform. We are excited by the opportunity that lay ahead of our budget. I will now turn over the call to Brandon Perthes, our Chief Commercial Officer.