What Fulgent Genetics (FLGT) Said on Its Q3 Earnings Call

Key Points

• Q3 revenue rose 8% year over year to $90.4 million, supported by Bako Diagnostics and StrataDx, while the GAAP net loss narrowed to $13.2 million from $29.5 million in Q2. Improving collections amid the billing-system transition also helped gross margin and adjusted EBITDA.
• Fulgent maintained its 2026 revenue forecast of $330 million to $340 million and narrowed its projected non-GAAP loss to $1.65–$1.75 per share, citing disciplined spending. It raised its expected year-end cash and securities balance to about $630 million.
• Anatomic Pathology revenue grew 57% year over year, while Precision Diagnostics revenue declined 18%. The company is expanding its pathology AI tools and advancing two therapeutic candidates, though management has not quantified AI’s current financial contribution.

Fulgent Genetics NASDAQ: FLGT reported third-quarter revenue of $90.4 million, up 8% from a year earlier, as contributions from Bako Diagnostics and StrataDx and improving collections helped lift results. The company reaffirmed its full-year revenue forecast and narrowed its projected loss.

The laboratory services and therapeutics company reported a GAAP net loss of $13.2 million, or $0.48 per share, compared with a $29.5 million loss in the second quarter. On a non-GAAP basis, the quarterly loss was approximately $2.4 million, or $0.09 per share.

Chief Financial Officer Paul Kim said third-quarter revenue included $21.8 million from Bako and StrataDx, up from $16.4 million in the preceding quarter. Total revenue rose from $85.4 million in the second quarter.

Billing Transition Remains in Progress

Fulgent’s transition to a new billing and revenue cycle management system continued to affect third-quarter results, although management said reimbursement trends improved sequentially.

Chief Commercial Officer Brandon Perthuis said the company had implemented several customizations needed to maximize reimbursement and had seen their effect in improved collection rates. Additional fine-tuning remains, and the company cannot predict precisely when further improvements will occur, he said.

Kim said gross margin improved faster than expected. Third-quarter GAAP gross margin was 35.3%, while non-GAAP gross margin was 36.3%. Kim attributed the sequential improvement partly to fixed costs being spread over a higher revenue base as collection rates improved.

GAAP operating expenses fell to $54.5 million from $61.8 million in the second quarter. Kim attributed the decline in part to $3.2 million in bad debt expense recoveries and the absence of a $2.2 million impairment charge recorded in the prior quarter. Adjusted EBITDA was a loss of approximately $7.5 million, compared with a $17.1 million loss in the second quarter.

Diagnostics and Pathology Performance

Precision Diagnostics revenue fell 18% year over year to $41.8 million, though it rose 1% sequentially. Anatomic Pathology revenue increased 57% from a year earlier and 9% from the second quarter to $40.9 million. BioPharma Services revenue was $7.7 million, up 5% year over year and 19% sequentially.

Perthuis said Fulgent’s artificial intelligence platform analyzed approximately 255,000 pathology slide images in the quarter, a 23% increase from the second quarter. Failed analyses declined to 0.01%, he said.

The company has four AI modules in production and plans to deploy five more applications in the fourth quarter. Its prostate cancer detection and grading module is undergoing pathologist evaluation; in internal testing across 262 cases, it identified 768 of 770 cancer-containing parts, Perthuis said.

Chief Executive Officer Ming Hsieh said AI is intended to assist pathologists with quality assurance and speed, with potential productivity and gross margin improvements in the future. Management did not quantify a current financial contribution from the technology.

Therapeutic Programs Advance

Hsieh said Fulgent met with the Food and Drug Administration in August after completing the majority of the phase 2 study of FID-007, its nano-encapsulated paclitaxel candidate. A phase 3 study is in preparation for patients with recurrent or metastatic head and neck squamous cell carcinoma, and the company expects to share more information later this year.

For FID-022, a nano-encapsulated SN-38 candidate being studied for solid tumors, phase 1 dose escalation was ongoing at the fifth dose level. Hsieh said the company expects to determine the maximum tolerated dose in the first half of 2027.

Kim said Fulgent now expects approximately $21 million in therapeutic development investment in 2026, reflecting updated timing for clinical spending.

Full-Year Outlook

Fulgent maintained its 2026 revenue forecast of $330 million to $340 million, representing projected growth of 2.3% to 5.4%. It improved its non-GAAP loss forecast to $1.65 to $1.75 per share from a previous range of $2.22 to $2.35, citing disciplined spending.

The company also expects a full-year non-GAAP operating margin in the low negative 20% range, an improvement from its previous outlook for the mid-negative 20% range. Kim said management was targeting fourth-quarter revenue above the roughly flat sequential result implied by the midpoint of its annual guidance.

Fulgent ended the quarter with approximately $652.4 million in cash equivalents, restricted cash and marketable securities. That balance included $112.3 million in federal tax refunds and related interest received during the quarter. The company raised its expected year-end balance to approximately $630 million from $610 million, citing an improved operating outlook and lower therapeutic development spending.

About Fulgent Genetics (NASDAQ:FLGT)

Fulgent Genetics, Inc is a technology-driven clinical diagnostics company that develops and performs genetic testing. Its testing platform uses next-generation sequencing and other molecular technologies to analyze DNA and support the diagnosis, screening and management of inherited and acquired diseases.

The company offers a range of tests, including panels for hereditary cancer, reproductive health and inherited disorders, as well as tumor profiling and other specialized clinical testing services.

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