Fulgent Genetics, Inc. Q4 FY2025 earnings call

• Laboratory services business: Sustained momentum in 2025, implemented best - in - class technology across the platform, launched EZO Plus imaging management system, accelerated product innovation with RNA integrated whole genome sequencing and ultra - rapid whole genome sequencing. Announced intention to acquire Bako Diagnostics and StrataDX, received approval from New York State for proprietary NIPT offering NOVA and whole genome sequencing test, approximately 100% digital across all cases on Easyopath platform with several internally developed AI modules in development.
• Therapeutic development: FID07 advanced through phase two with 46 patients enrolled, trial enrollment closed on time; FID022 progressing for phase one dose escalation.

In 2025, total revenue of the laboratory services business was $322.7 million, an increase of approximately 14% compared to 2024. The fourth quarter 2025 revenue was $83.3 million, up 9% year - over - year but slightly down quarter - over - quarter. Precision diagnostics revenue in the fourth quarter was $48.2 million, up 11% year - over - year but down 5% sequentially, and $190.5 million for the year, a 14% increase. AP revenue in the fourth quarter was $27 million, up 3% year - over - year and 4% sequentially, and $106.4 million for the year, a 10% increase. Biopharma services revenue in the fourth quarter was $8.1 million, up 32% year - over - year and 10% sequentially, and $25.8 million for the year, a 58% increase.

• 2026 revenue expected to be approximately $350 million, an 8.5% year - over - year growth. First half of 2026 impacted by largest customer moving significant volume in - house, second half expected to be offset by acquisition contribution of approximately $50 - $55 million from Bako and StrataDX.
• Non - GAAP gross margins expected to be slightly above 40% for full year 2026, but lower in first half due to smaller revenue base.
• Non - GAAP operating margin expected to decrease from minus 8% to minus 18% for 2026, driven by incremental expenses from acquisitions, sales team expansion and R&D investment.
• Full - year 2026 non - GAAP EPS guidance is a loss of $1.45 per share, excluding certain expenses. Cash position remains strong.

• Risk of significant revenue decline in first half of 2026 due to largest customer moving testing work in - house.
• Integration risk associated with acquisition of Bako Diagnostics and StrataDX.
• Risk of R&D spending and market expansion not meeting expectations.
• Regulatory approval and compliance risks for clinical trials and product approvals.

Q: Regarding the largest customer, how is the math and risk of them coming in - house more?

A: Revenue from largest customer was $70.8 million in 2025, expected to be $11.8 million in 2026, impact of loss is $59 million. Baco acquisition expected to provide $50 - $55 million offset. Customer has contractual arrangements, and company has visibility into the number.

Q: How to grow own brand diagnostics and size of business running other company's assays?

A: Drivers for precision diagnostics in 2026 include expanded carrier screening tests like BEACON with best - in - class turnaround time, whole genome sequencing with RNA integration showing momentum, somatic oncology volume improvement with Lumera assay.

Q: Capital allocation strategy and areas to target after Baco and Strata acquisition?

A: Area of AI is a target, looking for synergies in field of AI - enabled discoveries.

Q: Gross margin headwind and loss of cost synergies?

A: Loss of customer is a gross margin headwind, first half of 2026 gross margins expected to be lower, but rebound in second half. Baco not highly digital yet but portable, with cross - selling synergies and larger sales team expected.

Q: Cash burn and digital pathology impact on Baco and Strata?

A: Cash burn due to operating expenses increase from Baco acquisition. Baco not highly digital but portable, with efforts to bring them up to speed in digital and AI, improving efficiency and capacity.

Q: Shrinkage of physical footprint and labor spend with largest customer in - house?

A: 2026 plan excluding Baco keeps overall headcount relatively flat, viewing customer impact as one - time event and believing in future growth trajectory.