Fulgent Genetics Q3 2025 Earnings Report

Fulgent Genetics EPS Results

• Actual EPS: $0.14
• Consensus EPS: -$0.22
• Beat/Miss: Beat by +$0.36
• One Year Ago EPS: N/A

Fulgent Genetics Revenue Results

• Actual Revenue: $84.07 million
• Expected Revenue: $81.43 million
• Beat/Miss: Beat by +$2.64 million
• YoY Revenue Growth: N/A

Fulgent Genetics Announcement Details

• Quarter: Q3 2025
• Date: 11/7/2025
• Time: Before Market Opens
• Conference Call Date: Friday, November 7, 2025
• Conference Call Time: 8:30AM ET

Fulgent Genetics (NASDAQ:FLGT) (NASDAQ: FLGT) is a California-based company specializing in high-complexity genetic testing and diagnostic services. Operating from its headquarters in Temple City, Fulgent leverages next-generation sequencing (NGS) technologies and advanced bioinformatics to deliver a broad range of clinical and research assays. The company’s infrastructure includes CAP- and CLIA-certified laboratories, enabling it to process large volumes of samples with rapid turnaround times.

Fulgent’s product portfolio encompasses hereditary cancer panels, rare disease and neuromuscular disorder testing, pharmacogenomic screenings, non-invasive prenatal tests, and infectious disease assays including COVID-19 diagnostics. The company offers both clinician-ordered and direct-to-consumer testing models, as well as custom research services for biopharmaceutical partners and academic institutions. Through proprietary automation and AI-driven analytical pipelines, Fulgent aims to maintain cost-effective operations and high data quality for clients across the United States and select international markets.

Founded in 2011 by Ming Hsieh, Fulgent Genetics completed its initial public offering in 2019, expanding its capacity and geographic reach. Under the leadership of founder and chairman Ming Hsieh and an experienced management team, the company continues to invest in laboratory automation, informatics enhancements and strategic partnerships. Fulgent remains committed to regulatory compliance, quality assurance and ongoing innovation in molecular diagnostics to support personalized medicine and population health initiatives.

Fulgent Genetics Q3 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q3 revenue was $84.1 million and management raised full‑year 2025 revenue guidance to $325 million (≈15% YoY), with non‑GAAP gross margins >40% and updated non‑GAAP EPS guidance of +$0.30.
• Positive Sentiment: Therapeutics progress — phase 2 FID‑007 preliminary data (ESMO) showed a combined ORR of 51% and overall PFS of 7.8 months versus historical 2.3 months, with 43 patients enrolled and full readout expected in 2026; safety reported as manageable.
• Positive Sentiment: Product launches aimed at growth — an ultra‑rapid whole genome sequencing service (48‑hour preliminary / 5‑day full report) targeting NICU cases and an expanded Beacon carrier panel now covering 1,000 genes, plus ongoing Nova NIPT rollout.
• Positive Sentiment: Operational innovation — launched proprietary digital pathology IMS, EZOPATH, to integrate in‑house and third‑party AI tools, which management says will speed pathologist workflow and support margin improvement.
• Neutral Sentiment: Strong liquidity with ~$788 million in cash/securities (expected ≈$800M year‑end) and ~$139.6 million remaining buyback capacity, but anatomic pathology saw a sequential revenue dip due to billing/collections timing and biopharma services remain somewhat lumpy.

Presentation

[Operator]

Music. Welcome to the Fulgent Genetics Q3 2025 conference call and webcast. At this time, all participants are in listening-only mode. A question-and-answer session will follow the formal presentation. You may be placed into question queue at any time by pressing Star 1 on your telephone keypad. If anyone should require operator assistance, please press Star 0. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Lauren Sloane, Investor Relations. Please go ahead, Lauren.

[Lauren Sloane, Head of Investor Relations at Fulgent Genetics]

Good morning and welcome to Fulgent Q3 2025 financial results conference call. On the call are Ming Hsieh, Chief Executive Officer; Paul Kim, Chief Financial Officer; and Brandon Perthuis, Chief Commercial Officer. The company's press release discussing the financial results is available on the Investor Relations section of the company's website, ir.fulgentgenetics.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, expectations, 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.

[Lauren Sloane, Head of Investor Relations at Fulgent Genetics]

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 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 discussion relating to these forward-looking statements, including the discussions of some of the risk factors that may cause results to differ from those described in the 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, 2024, and subsequently filed reports which are available on the company's Investor Relations website.

[Lauren Sloane, Head of Investor Relations at Fulgent Genetics]

Management prepared remarks, including discussion of profit, loss, margin, 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 these measures 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 Q3 2025 for more information, including the description of how the company calculates non-GAAP income/loss, non-GAAP earnings/loss per share, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating profit and loss, and margin and adjusted EBITDA, and the reconciliation of these financial measures to income and loss, earnings/loss per share, and operating margin, the most directly comparable GAAP financial measures.

[Lauren Sloane, Head of Investor Relations at Fulgent Genetics]

With that, I'd now like to turn it over to Ming. Please go ahead.

[Ming Hsieh, Chairman and CEO at Fulgent Genetics]

Thank you, Lauren. Good morning, and thank you for joining our call today. I will start with some comments on Q3 of 2025 and our two business lines. Then Brandon will review our product and go-to-market updates for our laboratory services business. Paul will conclude with financial and guidance before we take your questions. We are pleased with our Q3 results and sustained momentum in the business as we move through the year. Our results are testament to the progress we have made on our strategic objectives in both our laboratory services and the therapeutic development business. We have shown both sequential and year-over-year growth and efficiency in laboratory services. With our investment in AI and digital pathology solutions, while making strong pipeline progress on our clinical candidates as a result of momentum in our business, we are raising our outlook for the remainder of 2025.

[Ming Hsieh, Chairman and CEO at Fulgent Genetics]

Our therapeutic development pipeline is on track and progressing well. Our first clinical candidate, FID-007, is progressing through a phase II clinical trial in combination with cetuximab in a patient with recurrent or metastatic head and neck squamous cell carcinoma. With 39 patients that have been randomized and 36 have received at least one dose of study treatment as of the cut-off date of September 25, 2025. The preliminary data was presented at the ESMO Congress on October 20, 2025. FID-007, combined with cetuximab, demonstrated meaningful anti-cancer efficacy at both dose levels for the first-line and second-line treatment of RMHNSCC of 35 patients, then evaluable for the efficacy at the time this preliminary data was reviewed. The objective response rate, or ORR, for the 75 mg/m2 arm and 125 mg/m2 arm were 44% and 59%, respectively, and 51% overall when both arms are combined.

[Ming Hsieh, Chairman and CEO at Fulgent Genetics]

The median progression survival for the 75 mg arm and 125 mg arm were 9.2 months and 7.8 months, respectively. The overall PFS was 7.8 months compared to the historical 2.3 months of the standard care therapies. FID-007 also exhibits manageable safety and tolerability profile. Particularly, no grade 3 and above peripheral neuropathy has been reported to date. As of today, we have a total of 43 patients enrolled and expect to complete patient enrollment by the end of 2025, with full data readout in 2026. Our second candidate, FID-022, began a phase I trial, and the first dose level has been successfully completed. While the second dose level will come this month, FID-022 is a nano-encapsulated SN-38 for the treatment of solid tumors, including potentially colon, pancreatic, ovarian, and bile duct cancers. I'm encouraged by the continued progress of our clinical pipelines and the potential for both FID-007 and FID-022.

[Ming Hsieh, Chairman and CEO at Fulgent Genetics]

These drug candidates address heavily pre-treated patients with very few options left, and I hope we were able to provide alternatives to better their lives. Overall, I'm pleased with the progress we have made this year in both our business areas. Our Pharma R&D efforts are progressing faster, better, and more cost-effective than planned. Additionally, our laboratory services are greatly benefiting from our investment in AI technology, which makes our services more efficient and more precise, as Brandon will discuss shortly. I would like to thank our employees, partners, and stakeholders for your hard work and your loyalty in the Q3 of our business. We look forward to further progress in the remainder of 2025. I'll now turn over the call over to Brandon Perthuis, our Chief Commercial Officer, to talk more about our laboratory services business. Brandon.

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

Thanks, Ming. It was again another excellent quarter, delivering nearly $84 million in laboratory services revenue. Breaking down our results by business area, precision diagnostics was up $3.4 million, or 7.3% sequentially, and was up $7.2 million, or 16.4% year-over-year. BioPharma was up $1 million, or 15.4% sequentially, and was up $3.3 million, or 83.4% year-over-year. Anatomic pathology was down $2.1 million, or 7.6% sequentially due to timing of collections. However, was up $1.8 million, or 7.2% year-over-year. In the last quarter, we introduced an enhanced version of our whole genome sequencing that incorporates RNA analysis to improve diagnostic yield. This new offering has sparked strong interest from both existing and prospective clients. Building on that momentum, we're pleased to announce the launch of our ultra-rapid whole genome sequencing service. This solution provides a preliminary report within 48 hours, followed by a comprehensive report within five days.

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

The primary focus for this service is the Neonatal Intensive Care Unit, or the NICU, where studies have shown that whole genome sequencing can significantly improve patient outcomes and support more efficient healthcare delivery. The data suggests that implementing rapid genome sequencing as a first-line test in the NICU will change medical management for up to 87% of babies and reduce healthcare costs up to $15,000 per child. Our second exciting announcement centers around the expansion of our Beacon carrier screening service. We've consistently pushed the boundaries to remain at the forefront of genetic screening, having been the first U.S. laboratory to offer a panel with over 700 genes, still the largest of its kind to the best of our knowledge. Now we're taking another major step forward with the launch of Beacon K, which expands our panel to 1,000 genes.

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

This enhancement will further strengthen our ability to detect rare genetic conditions. Beacon has earned a strong reputation as a leading carrier screening solution. Powered by our proprietary platform in advanced informatics, Beacon consistently delivers high analytical detection rates, accurate differentiation of pseudogenes, and reliable copy number variant calls. Additionally, our turnaround time remains exceptional, averaging just 8.8 days, roughly twice as fast as many other laboratories. We have mentioned on previous calls the significant investment we have made in digital pathology. This has allowed us to digitize our slides instead of the traditional method of microscopy. There are several advantages to digital pathology, but perhaps the most powerful one is our ability to utilize and develop AI to help make our pathologists faster and better. Until very recently, we were using a third-party image management system, or IMS, but it had limitations.

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

However, we're excited to announce we have developed and launched our own proprietary IMS, which we are calling EZOPath. EZOPath was created to address the growing demand for custom features necessitated by our high daily case throughput to support all lines of business and to enable the deployment and integration of AI tools to assist our pathologists in their diagnoses. EZOPath provides a case management solution with possible integrations with laboratory information systems, or LISs, provides data storage for digital pathology images and metadata, enables collaboration by pathologists through sharing of annotations and comments, and integrates best-in-class AI tools developed in-house and integrated from third parties. As an enterprise IMS, it enables rapid investigation of digital pathology slides and output from AI modules for expedited reporting. We are committed to creating the highest quality and most efficient pathology lab possible, and this is a big step in that direction.

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

With a strengthened product portfolio, outstanding laboratory performance, and an expanded sales team, we believe we are well-positioned for continued growth, and we're pleased to once again raise our annual guidance. I want to sincerely thank our entire team for their hard work and dedication, and we look forward to finishing 2025 on a strong note. With that, I'll turn the call over to our Chief Financial Officer, Paul Kim. Paul?

[Paul Kim, CFO at Fulgent Genetics]

Thank you, Brandon. Revenue in the third quarter of 2025 totaled $84.1 million compared to $81.8 million in the second quarter of 2025. Since revenue from COVID-19 testing is expected to continue to be negligible in 2025, we will no longer provide separate metrics on what we have previously referred to as core revenue, which we defined as total revenue excluding COVID-19 testing. Separately, we have begun to see minimal revenue in our therapeutic development business from our acquisition of AMP in July, primarily related to IP licensing royalties. Gross margin on a non-GAAP basis was 44.3%, and on a GAAP basis was 42.2%. Gross margins have improved year-over-year due to streamlined operations and enhanced efficiency as a result of our investments in scaling and centralizing lab operations. Now, turning to operating expenses, non-GAAP operating expenses totaled $40.7 million compared to $43.9 million in the previous quarter.

[Paul Kim, CFO at Fulgent Genetics]

Total GAAP operating expenses were $50.9 million for the third quarter, which decreased when compared to $54.1 million in the prior quarter. The decrease in operating expenses was partially driven by a reduction in advertising and marketing expenses and a favorable reduction in bad debt expense, reflecting improved collections from precision diagnostics. We remain committed to R&D spending to support both our laboratory testing services and our clinical studies, and to sales and marketing spending to expand the sales team. Non-GAAP operating margin improved sequentially to minus 4.2%. Our GAAP loss in the current quarter was $6.6 million, an improvement from the prior quarter's GAAP loss of $19 million, which included a one-time non-cash charge related to a $9.9 million impairment of a prior investment. Adjusted EBITDA for the third quarter was approximately $0.7 million compared to a loss of $3 million in Q2 2025.

[Paul Kim, CFO at Fulgent Genetics]

On a non-GAAP basis and excluding equity-based compensation expense, intangible asset amortization and acquisition-related costs, income for the quarter was approximately $4.5 million, or $0.14 per share based on 31.3 million weighted average diluted shares outstanding. In the third quarter, we did not repurchase any shares under our stock repurchase program. Since the inception of the stock repurchase program in March 2022, a total of approximately $110.4 million has been spent, with approximately $139.6 million remaining available for future repurchase of our common stock. Turning to the balance sheet, we ended the third quarter with approximately $787.7 million in cash, cash equivalents, restricted cash, and marketable securities. The increase in cash from the previous quarter is driven by strong operating cash flows, partially offset by capital expenditures. There were no stock or income tax credits purchased during the third quarter.

[Paul Kim, CFO at Fulgent Genetics]

However, in October, we used $67.9 million for the purchase of income tax credits. As I mentioned earlier, given the minimal impact of COVID-19 testing revenue on our overall performance, we have transitioned to guiding total revenue. Reflecting on our current business momentum, we are revising our full year 2025 revenue outlook upward to $325 million for 2025, representing a growth of 15% year-over-year. We continue to expect non-GAAP gross margins for the full year to exceed 40%, continuing the strong momentum we've experienced in recent quarters. We expect non-GAAP operating margins to improve from minus 15% to minus 10% for the year, driven largely by increased revenue. Our strategy for success centers on continuing to scale efficiently and driving innovation across our service offerings. We will continue to invest in business expansion, further advancing our laboratory operations and upgrading existing laboratory facilities while remaining focused on managing our spending.

[Paul Kim, CFO at Fulgent Genetics]

We believe that our foundational technology platform supports a strong long-term margin profile. Using an average share count of 31 million, we expect an improvement to our full year 2025 non-GAAP EPS guidance from a loss of $0.35 per share to a positive $0.30 per share, excluding stock-based compensation, impairment loss, acquisition-related costs, and amortization of intangible assets, as well as any one-time charges. Reflecting the improvement in our operations, which is offset by the effect of the one-time non-cash impairment adjustment, we are now revising our GAAP EPS guidance from a loss of $1.70 per share from $2.10 per share, excluding any future one-time charges, using a 31 million average share count. Finally, our cash position remains strong. We focus on efficient capital allocation that allows us to reinvest in our business, fund key initiatives, and support future growth.

[Paul Kim, CFO at Fulgent Genetics]

Excluding any future stock repurchases or other expenditures outside the ordinary course, which include M&A, we anticipate ending 2025 with approximately $800 million of cash, cash equivalents, restricted cash, and investments in marketable securities. This number further assumes receipts of approximately $106 million in tax refunds prior to the end of 2025, which may be delayed as a result of the current government shutdown. Overall, we see strength in our core business, which has grown organically, and we see good momentum for the balance of 2025. Thank you for joining our call today. Operator, you may now open it up for questions.

[Operator]

Certainly. We'll now be conducting a question-and-answer session. If you'd like to be placed into question queue, please press Star 1 on your telephone keypad. A confirmation tone will indicate when your line is in the question queue. You may press Star 2 if you'd like to move your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing Star 1. One moment, please, while we pull up for questions. Our first question is coming from Lu Li from UBS. Your line is now live.

[Lu Li, Director of Healthcare Equity Research at UBS]

Great. Thank you. Good morning. Thank you for taking my questions. The first one on the margin. Appreciate the new disclosure on the margin by segment. It seems like the lab is turning positive margin in the quarter. I wonder, Paul, how do you think about the going forward path in terms of what will be the ultimate operating margin target that you're looking for? Thanks.

[Paul Kim, CFO at Fulgent Genetics]

Sure. Thank you for the question, Lu. We were really pleased with what we saw in the gross margins for this quarter. As you remember, we had high margins in Q3, but Q3, we had an impact, a favorable impact to the margins of about $1.6-$1.7 million. That was due to our capitalization policy. In this quarter, in the third quarter, even without that, our margins, they came in just as high at 44.3%, actually a little bit higher than what we achieved in Q2. That is due to the overall efficiencies of the organization, continued automation that we have for the business, and streamlining our policies.

[Paul Kim, CFO at Fulgent Genetics]

I'll turn it over to Ming, who can talk about what we see directionally for margins in our business without giving out specific numbers, because there are particular technologies that we are beginning to utilize which might enhance our margins going forward.

[Ming Hsieh, Chairman and CEO at Fulgent Genetics]

Yes. Thanks, Paul. Lu, as you probably hear from Brandon, we started to develop the AI technology in-house, building our capability through our digitalization of almost the entire pathology services. We will continue to see the improvement in the area. In addition, we will be building a pretty rich database for us to continue the benefit for us to get into further margin and reimbursement improvement in the territory. Anything, Brandon, you want to add?

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

No, I think that's well said, Ming and Paul. Thank you.

[Lu Li, Director of Healthcare Equity Research at UBS]

Thank you. Second question on the AP. Brandon, I think you mentioned there were some timing issues in the quarter. I'm wondering if you can give a little bit more color and whether that will be a catch-up in Q4, and then I have a follow-up.

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

Yeah, certainly. Thanks for the question. Yes, it was a timing issue. It was mostly related to the collections in the quarter, which did reduce the amount of revenue we could recognize. Already in this quarter, we're beginning to see an improvement in the collections, and we think that that's going to continue to improve the next couple of quarters. No, no material weakness in the business, just a timing issue around collections.

[Lu Li, Director of Healthcare Equity Research at UBS]

Okay. And then on the precision diagnostic, you mentioned several new products, the rapid whole genome, and then you talk about the expanding of the Beacon panel. I wonder how this new manual expansion kind of supports the growth going forward. You seem pretty confident in terms of growing double-digit forward. I wonder how should we think about the 2026 things?

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

We are really excited about launching both of those products. I think our R&D investment there was quite efficient. Our timing was quite efficient. We last quarter launched a new improved whole genome sequencing test that included RNA, which is a significant diagnostic yield increase. That is generally sold into pediatrics, developmental pediatricians, geneticists. If you want to help families in the NICU, which require rapid results, we needed a faster product. The follow-on to our last quarter update is this new ultra-rapid whole genome sequencing test. This is more or less a first time for us to launch a product directly targeted at the NICU. We believe our turnaround time, some of the features around the genome in terms of its variant-calling ability, puts us in a strong position to penetrate that market.

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

We mentioned on the call, I mean, this is becoming a standard of care in the NICU for many patients. It is a favorable margin profile in terms of billing institutionally for the test. We will see how much it contributes to 2026, but at the end of the day, it is going to be a powerful product for clinicians to use in the NICU. I am excited the team was able to launch it so quickly. It does dovetail right into what we have been talking about, expanding our sales team. We have invested significantly in expanding the pediatric sales team. This puts one more powerful tool in their bag to sell when they are visiting children's hospitals and academic medical centers. Regarding Beacon, we continue to push the envelope there. We believe, especially in the reproductive setting, there is a need to test for more.

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

There's a desire to test for more conditions. I mean, these conditions become rarer as we add more, but collectively, they're not rare. We're going from 700 genes, which we've been offering now for about a year, to 1,000 genes, which should make us, as far as we know, the largest panel on the market. Our Beacon portfolio has performed incredibly well. I mentioned our turnaround time of 8.89 days. That's exceptional. I mean, we're dealing with patients where turnaround time is critically important, whether they're going through fertility treatments, whether they're already pregnant. There's a lot of anxiety there. To be able to give results that quickly does give us a significant advantage in the marketplace.

[Lu Li, Director of Healthcare Equity Research at UBS]

Thank you.

[Operator]

Thank you. Next question is coming from David Westenberg from Piper Sandler. Your line is now live.

[Dave Westenberg, Senior Research Analyst at Piper Sandler]

Hi. Thank you for taking the question. Actually, I'm going to continue with some of those questions. So Brandon, with the Nova product, are you finding that physicians prefer to order kind of the bundle of tests versus just a single NIPT test or carrier or microdeletions all in one? Is that favoring you? And can you give us a reminder on how those are reimbursed again, if they're reimbursed kind of in a bundle, if they're reimbursed separately? Thank you.

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

Yeah. Thanks for the question, David. I mean, certainly in the OBGYN and MFM market, NIPT and carrier screening is often ordered bundled together. Not always, but very frequently. I think we've established a really good brand for Beacon, our carrier screening product in the marketplace. I think we've become sort of a go-to laboratory for carrier screening. Our turnaround time, our quality, the number of genes, the customization, we've really fired on all cylinders as it relates to carrier screening. Not too long ago, we decided to launch Nova, a novel NIPT test. The strategy there is to sell those together. They are two independent tests, right? Testing for completely different things. You asked, is it bundle billing? No. I mean, it's a separate orderable test. We get an order for Nova, we bill for Nova.

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

We get an order for Beacon, we bill for Beacon. Not bundled together from a billing perspective, but clinically, they're very often ordered together.

[Dave Westenberg, Senior Research Analyst at Piper Sandler]

Perfect. And then just continued reimbursement updates. I mean, I think that ACOG update on expanded carrier screening has been taking a lot longer than I think the industry expected. If there's any update there, or if insurance companies are just kind of seeing the value of expanded carrier screening already and maybe proactively reimbursing ahead of that. And same question for kind of microdeletions, which is another one where we kind of thought the George syndrome was already going to be covered by now.

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

Yeah. Good question. I mean, look, not everything hinges on that ACOG statement. There is a lot of other efforts going on behind the scenes. Actually, a lot of the companies are all working together, actually as a part of a coalition to expand access to some of these tests. Certainly, a new ACOG guideline would be beneficial to the industry. We are seeing payers get ahead of that. I think some of these other grassroots efforts that are happening, working directly with the payers to show them the value proposition, to show how it impacts clinical care, some of these payers are getting ahead of that guideline. I think the guideline will just push it one step further. We continue to see increased reimbursement for many of our tests, not just reproductive health.

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

I think it's really a result of working directly with the payers and showing them that clinical proposition. Hopefully, before too terribly long, we might get some positive news from ACOG to take it to the next level.

[Dave Westenberg, Senior Research Analyst at Piper Sandler]

Got it. My last question is a combination for Ming Hsieh and Paul. It looks like you had some good data on FID-007 in phase II. Are you going to have additional updates in phase II before moving on to phase III? What are the key milestones to look out for? Paul, if you can maybe explain the additional expenses that would come for moving from phase II to phase III, what kind of increases in expenses you would expect? Thank you very much.

[Ming Hsieh, Chairman and CEO at Fulgent Genetics]

All right. Thank you, David, for the questions. We expect to finish the enrollment by the end of 2025. By the ESMO, which is May of 2026, we expect to do our presentation for the data we have, which we feel is very exciting. By that time, for all the patients enrolled in the database, we'll have at least had one or two scans already. That will further enhance the data we present at ESMO in September this year. This will give us strong confidence to move the FID-007 into the phase III clinical trial because we see a significant progression-free comparison with the standard cares. In terms of what is the phase III cost in terms of moving forward, I think it depends on the final statistician come out a number and our phase III design. We are in the process now.

[Ming Hsieh, Chairman and CEO at Fulgent Genetics]

We estimate it's around 300 patients to be enrolled. From that point of view, the clinical cost of phase III is roughly around $60 million.

[Paul Kim, CFO at Fulgent Genetics]

Just to give you a full picture on the spending, for 2025, we anticipated the cash spend for the therapeutics development would be about $25 million for the balance of the year. We believe that that spending is going to be a little bit less than that for this year. I think the great news for the company, whether it be the therapeutics development or the laboratory services, is the amount of science and the progress that we have seen so far for the therapeutic development. With spending a little bit less than what we have anticipated is something that makes us really pleased because it goes back to the efficiency of our spending. If you take a look at the laboratory services business, we've raised our guidance twice this year.

[Paul Kim, CFO at Fulgent Genetics]

All in the meanwhile, the cash forecast and our cash target, as you probably saw in the press release, has been raised to $800 million. Efficiency in running the operations, managing our cash, and getting output for our business, whether it be increased revenues for the laboratory services or the science and the data that we're seeing in the therapeutics development, we're very pleased with.

[Ming Hsieh, Chairman and CEO at Fulgent Genetics]

Yeah. Dave, for the ESMO data, we published it in September, October this year, which the data cut off on this in September is available online. You should see it's pretty impressive data in terms of about the efficacy of FID-007. We are very pleased and very much encouraged. There are similar transactions in the area. The market is big, multi-billion dollar market. It's addressable by our products. We are very encouraged and we believe that our investment will have a great return. In addition, this is not one drug. This is a platform performance. We have, using the same delivery platform, the second drug, FID-022. That one in the phase I for the dosing escalation exercise, it has went well. We are also very much looking forward to provide the additional data by mid next year.

[Dave Westenberg, Senior Research Analyst at Piper Sandler]

Thank you.

[Operator]

Thank you. Next question today is coming from Andrew Cooper from Raymond James. Now live.

[Andrew Cooper, VP of Equity Research at Raymond James]

Hey, everybody. Thanks for the questions. Maybe just first, we want to dive in on the anatomic pathology collections dynamic. We're not necessarily seeing that in the receivables. Just if you could unpack a little bit more sort of what's going on there and what gives you the confidence that it is just collections timing, if there's any volume stats or anything like that that you could share to help us get a little bit better understanding, that would be great.

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

Hey, Andrew, it's Brandon. Thanks for the question. No, it really was a timing issue. I mean, at a high level, we made a change in our billing software. It takes a little bit of time to implement the new software. Software has been implemented. Things are going well. We're seeing collections begin to improve. It was just around changing a billing software.

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

In terms of the receivables, as you're very familiar with, precision diagnostics is the biggest part of our business. We had very strong collections during the quarter for that area of the business.

[Andrew Cooper, VP of Equity Research at Raymond James]

Okay. Great. That's helpful. Is there any, just so we're kind of prepared for it if it does come again, are the software changes in place kind of across precision diagnostics as well? Is there any kind of potential disruption in any other segment as we move forward, knowing that it may just be timing, but at least to keep us on the lookout?

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

Mostly related to AP.

[Andrew Cooper, VP of Equity Research at Raymond James]

Okay. That is helpful. Then pharma services had a nice quarter. Just want to kind of dive in a little bit there on the strength. Knowing this can be big and lumpy, is this a single program and a timing dynamic that is better in the quarter? Obviously, had you raised the guide for the year, or is this a little bit more kind of broad-based, finding some traction? Just would love some understanding of what's letting you succeed there and sort of where the success is coming from.

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

Yeah. Thanks for the question. Look, I think it's mostly related to our capabilities expansion. I think we've mentioned before that pharma services at one point was pretty much just NGS. That limited our market size there. There were a lot of RFPs that were being presented to us that required additional technology that we didn't offer at the time. We had a smaller addressable market when we were just an NGS shop. Since then, we've launched a lot of new tests in our biopharma services division. That's allowed us to expand that addressable market and just blocking and tackling, allowing us to respond to more RFPs. The business is still a bit lumpy. I mean, this is just the nature of these wins. The pipeline looks good. Again, our capabilities are strong.

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

I think the feedback we're getting from our biopharma partners is incredibly strong. They do value the tests that we're providing and the service we're providing. It is an area we're going to continue to invest in. We'll continue to see some lumpiness. Overall, we're quite pleased with the capabilities and the progress of that business.

[Andrew Cooper, VP of Equity Research at Raymond James]

Okay. Helpful. Then another good quarter of precision diagnostics, you were up $3.5 million or so sequentially, I think like $7 million year-over-year. Can you just ring-fence for us kind of the growth contributions you're getting there? How much of that is Beacon versus Nova versus other parts of the portfolio to help at least kind of rank order or give some flavor for the traction there?

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

Yeah. I mean, Beacon continues to be a really important test for the company. It's continued to grow. We're winning new customers. We're moving into new markets. Really pleased with the progress of Beacon. Hopefully, launching Beacon K takes it to the next level. Certainly, keeping our turnaround times where they are has just been hugely important for the company. Nova is not yet a meaningful contributor to revenue. We're still trying to break into that OBGYN marketplace. A lot of the Beacon business historically has been from the fertility side of things, REIs and fertility clinics. Beacon continues to be quite important. We are seeing great momentum in our exomes and genomes as well. Our oncology business is doing well, especially on the heme side.

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

I think just overall, I mean, you look at all the different sort of divisions of the company, they're all doing well, all firing on all cylinders, and we see great momentum.

[Andrew Cooper, VP of Equity Research at Raymond James]

Okay. Great. I'll stop there and hop back in the queue. Thanks, everybody.

[Brandon Perthuis, Chief Commercial Officer at Fulgent Genetics]

Thanks, Andrew.

[Operator]

Thank you. We've reached the end of our question and answer session. 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.

Participants

Executives

• Lauren Sloane, Head of Investor Relations
• Ming Hsieh, Chairman and CEO
• Brandon Perthuis, Chief Commercial Officer
• Paul Kim, CFO

Analysts

• Dave Westenberg, Senior Research Analyst at Piper Sandler
• Andrew Cooper, VP of Equity Research at Raymond James
• Lu Li, Director of Healthcare Equity Research at UBS