Fulgent Genetics, Inc. (NASDAQ:FLGT) Q4 2022 Earnings Call Transcript

I think for the Anatomical Pathology, that market traditionally has a lower margin profile. And although we’re doing everything possible to gain efficiency for that marketplace, utilizing right, the systems that we have, it is going to take time. It’s not something that is going to happen overnight. That was not our expectation. And we — our anticipation is that the margin profile for that business, although it’s low, will slowly, right, begin to look more favorable, right, throughout the course of time. But come the Precision as well as the Pharma Services, both the margin profile for those businesses are attractive to begin with. But I’ll turn it over to Brandon, who can talk about, right, the margin profile in those markets.

Brandon Perthuis: No, I don’t have a lot to add there. Maybe I’ll just move on to your second question which was menu expansion. I’m not aware of any company that’s launched as many tests as Fulgent has in the last several years. I mean, we clearly have an ability to rapidly launch test and commercialize them at scale. We’re continuing to do so. We talked about a few on the phone call today. We launched our largest ever carrier screening panel today. We talked about launching our new Heme NGS Profile which we actually have MolDX approval for with a really attractive reimbursement rate. And we’re going to continue to launch new products in essentially all the areas of our business, precision medicine as well as Pharma Services Also, we talked about launching today, new Pharma Services that we can better serve our clients.

So we certainly see as part of our mission to continue to expand our testing portfolio via more of a one-stop shop for all of our clients. And our R&D and our technology really allows us to do this with modest investment in R&D. So I think the answer — short answer is yes, you can expect continued menu expansion. And then the third question you asked is about organic versus inorganic growth. What we’re seeing in the back half of last year and early into this quarter is fantastic organic growth. We are capitalizing on market opportunities with product and technology we had available at Fulgent and we are seeing fantastic organic growth in the company. That said, we continue to look at M&A as an option. And this leadership team consistently evaluate companies and assets.

So I think as Paul mentioned on the call, the growth is likely to come from organic — a mixture of organic and inorganic but all of the above is certainly in play and we think we have that optionality for 2023 and beyond.

Operator: Thank you. We reached the end of our question-and-answer session. And ladies and gentlemen, that does conclude today’s teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.