Fulgent Genetics, Inc.

Hello, and welcome to the Folgen Genetics Q1 2023 earnings conference call and webcast. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Melanie Solomon, Investor Relations. Please go ahead.

Thanks, Kevin. Good morning and welcome to the Fulgent first quarter 2023 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 the financial results is available on the Investor Relations section of the company's website, www.fulgent.com. A replay of this call will be available shortly after the call concludes on the Investor Relations section of the company's website. 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 a forward-looking statement. 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 results, 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 four of the new 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, 2022, and subsequently filed reports which are available on the company's investor relations website. Management's prepared remarks, including discussions of earnings and earnings per share, contained 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 first quarter of 2023 for more information, including the description of how the company calculates non-GAAP income or loss, earnings or loss per share, and adjusted EBITDA, and a reconciliation of these financial measures to income or loss and earnings or loss 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, Melanie. Good morning. And thank you for joining our call today. I will start with some comments on the quarter. Then Brandon will review our product and go-to-market updates from the first quarter. And then Paul will conclude with the financials and outlook before we take your call. We are pleased with our results in the first quarter. Exceeding the revenue guidance we provided earlier this year on our last call. We also had $3 million in revenue from COVID-19 testing. bringing us to accumulated $2 billion in revenue from COVID-19 testing since 2020. More importantly, revenue from our core business outperformed our expectations. This was driven by strong results from our pharma services segment and precision diagnostics segment. Including launch of our expanded beacon testing, we see continuing momentum for beaking testing, as well as other reproductive health service. According to recent report from Faust and Sullivan, it is estimated that global prenatal testing market was over $8 billion in 2021, and is forecast to grow to over $11 billion by 2026, a 7% figure. Over $8 billion in 2021, 31% was carry screening, or $2.5 billion. This forecast broke to $3.2 billion by 2026. With the consolidation in the space, we now find our company as one of the top providers of carrier screening in the U.S. with a significant runway for growth. I want to make comments on informed diagnosis. As we have mentioned, the informed diagnosis business bolsters our capabilities in anatomic pathology and adds significant revenue, though it has put some pressure on margins. As we continue to integrate acquisition, our focus on the implementing improved process to increase margin and continue to grow the top line with new client acquisitions. This will take some time. Long term, we believe the opportunity we have is a value of thousands of customers we gain and potentially to expand the offering to them. However, we do see significant opportunity for cross-signing in the precision diagnosis market. Given the first quarter result, we are raising our full year guidance to account for momentum we see with reproductive health services this year and anticipated COVID-19 revenue. we are moving to the right direction in terms of sales momentum. We expect to see this year as we grow our core business across precision diagnosis, pharma service, and anatomic pathology. Turning to our pharma business, Fulgen Pharma has developed and processed a novel nanoencapsulation technology, which includes over 40 patents and a targeted therapy platform designed to improve therapeutic windows and pharmacokinetics profile for both new and existing cancer drugs. Our lead drug, Kennedy FID-07, has shown promising results for the treatment of numerous cancers, including head and neck, ampullary, and pancreatic, with reduced side effects. We will share data from the ongoing Phase 1b study at upcoming American Society of Clinical Oncology Annual Meeting in Chicago, June 2nd to 6th. We look forward to share additional progress and a new initiative on the pharma business as we move throughout the year. I'd like to thank our employees and shareholders for your loyalty during the past quarter. We look forward to the year ahead and the momentum we are creating with our combined business. Now, I'll turn the call over to Brandon Perthes, our Chief Commercial Officer, to talk about our diagnostic business results during the quarter. Brandon.