NEW YORK – Fulgent Genetics has already recouped its investments in COVID-19 testing, according to company officials, which should help grow full-year 2020 revenues fourfold, compared to 2019.
"Our COVID-19 business has surpassed our most augmented expectations," CEO Ming Hsieh said Tuesday on a conference call with investors.
"The demand for COVID-19 services is strong and the pipeline for additional customers is quite remarkable," Fulgent Chief Commercial Officer Brandon Perthuis added. "At this time, Fulgent has an impressive array of COVID-19 customers, from some of the largest municipalities in the US, to Fortune 100 companies, large specialty care companies with thousands of locations, large hospital systems with hundreds of locations, assisted living facilities across the United States, and many more." Los Angeles, Orange, Santa Clara, and San Bernardino Counties have all signed up with Fulgent to run drive-through and walk-up testing sites, and the firm has even won a competitive request for proposal to provide COVID-19 testing of athletes from a "major" National Collegiate Athletic Association conference.
Company officials credited investments in information technology with helping to scale up testing capacity and land big contracts. "A challenging area that our high-volume customers have identified has been managing logistics and reporting," Perthuis said. To address these needs, Fulgent has built three sample-to-result solutions with web-based reporting around its tests: the Fulgent Community COVID-19 platform, for civic entities offering drive-through and walk-up testing; the Enterprise COVID-19 screening platform, for companies deploying routine employee testing; and Picture Genetics COVID-19 for partners, a bulk-order platform for the firm's COVID-19 test with at-home sample collection.
"Here at Fulgent we test our employees every day on one of those platforms. It's extremely convenient," Perthuis said. "So, I think the back-to-work and the back-to-school is probably going to be one of the larger growth areas for COVID-19 testing going forward."
The Temple City, California-based genetic testing firm's SARS-CoV-2 PCR tests have helped increase the number of billable tests per quarter tenfold over the second quarter of 2019. Fulgent has also developed a next-generation sequencing-based test for the virus and offers IgG and IgM serology tests.
Fulgent boasts a 24-hour turnaround time for its PCR tests and has achieved around-the-clock operation, reaching capacity of about 30,000 tests per day. The PCR COVID-19 tests accounted for about 60 percent of the firm's testing revenues in the second quarter. By year's end, Fulgent projects it will have performed over 1.3 million total tests, resulting in full-year 2020 revenues of $120 million and income of $25 million.
On the call, company officials described their three COVID-19 testing solutions that are driving the growth in billable tests.
The Fulgent Community COVID-19 platform manages drive-through and walk-up testing with a website that helps patients find a testing location, set up an appointment, and complete questionnaires while helping administrators set lanes, available time slots, and manage the collection process. Reporting can connect directly with patients' mobile phones and enables contact tracing.
The Enterprise COVID-19 screening platform is helping companies who want to do routine, repeat testing. Some customers are looking to test employees as many as three times a week, Fulgent officials said. "An employee can simply approach the customer station, scan their employee badge or other identifiers, self-administer a simple nasal swab, and drop it into a collection box to be sent to Fulgent," Perthuis said. The platform includes a barcode scanner, pre-barcoded sample collection tubes, and materials. Fulgent designed the system to also be able to use the QR code scanning feature of smartphones.Â
The firm is also partnering with some customers to offer its Picture Genetics COVID-19 at-home test, which also has FDA EUA. Partners can order the tests in bulk and manage the order and results via the Picture COVID-19 partner portal. "This solution is particularly suited for schools, where students need to be tested before returning to campus," Perthuis said.
On its own, the Picture test "is getting tremendous demand," CFO Paul Kim said. "We actually think that the growth for that platform might even be higher than what we see for traditional RT-PCR" testing. "Patients are appreciating the convenience of an at-home test and it's a great resource to conserve valuable physician time and PPE," Perthuis noted. Insurers are now paying for Fulgent's at-home testing and the out-of-pocket cost has fallen from $119 to $39, which covers the cost of the kit and shipping. "This new insurance component includes the upfront automated verification benefits and is integrated with our revenue cycle management system for simplified filing and insurance claims," Perthuis said.
The firm's NGS test has been less popular; however, sequencing as a service has gained momentum, as many organizations are looking to sequence the genomes of SARS-CoV-2 samples, Perthuis said. "We think that that will grow over time as we make our capabilities known with the pharma organizations," Kim added.
"I still think the country is trying to figure out perhaps the best testing protocol, how often to test, how to administrate, but most importantly, we've developed multiple different platforms and solutions to make potentially all of them much easier," Perthuis said.
Wall Street's response to Fulgent's coronavirus testing push was positive. "We applaud Fulgent's rapid pivot to COVID-19 testing and believe they can continue to be successful given their technology innovations and rapid turnaround time," Piper Sandler analyst Steven Mah wrote in a research note. He raised the price target for shares of Fulgent to $68 from $31.
"While the durability of the COVID-19 testing opportunity particularly beyond 2020/2021 is uncertain, we believe Fulgent's commercial efforts associated with COVID-19 testing and experiences engaging with various market segments position the company well to further strengthen its core genetic testing opportunities in the future," BTIG analyst Sung Ji Nam wrote in a note, also raising the price target for Fulgent shares, to $35 from $20.