Fulgent Genetics, Inc. (NASDAQ:FLGT) Q2 2023 Earnings Call Transcript

Andrew Cooper: Hey, everybody thanks for the question. Maybe first kind of tagging on to the back end of that. You talked about the automation and the improvement there. I think you did mention in the prepared remarks, a little bit of turnaround time increase as volumes ramped as much as they did. Can you just give us a little bit more color on sort of how much that was, whether it’s worked to lower and how we should think about the turnaround times as you continue, hopefully, to grow the volumes on the inbound side?

Brandon Perthuis: Yes. Thanks, Andrew. Good question. The turnaround time did increase, but it was a short window, right? We did a much better job capturing market share than perhaps we were anticipated, and that’s great execution by the sales team and our company. But the increase in volume was tremendous. So — and I’m proud of the lab and how they were able to digest it. I mean the turnaround time maybe had a 25% to 50% increase for a couple to a few weeks. As Ming mentioned, during that time, we began to improve additional processes and procedures and streamline. And at this point, turnaround time is back on track. I mean I think we’re around 14 or 15 days for carrier screening and exomes are back down. So it was a temporary increase and really allowed us to go into the systems and make those improvements and get it back on track.

And turnaround time is something we monitor very, very closely. It’s incredibly important for our clinicians. While we talked about it, we’ve mentioned it in our script. And going forward, we intend to meet our turnaround time, which, depending upon the product, it could be anywhere between two and six weeks. But especially in the reproductive space, that sort of two-week to three-week turnaround time is critical, and we’re sort of back on track and don’t see any disruption to that in the future.

Andrew Cooper: Okay. That’s super helpful. Go ahead.

Ming Hsieh: Remember, Brandon mentioned, we also made the lab consolidation during the quarter. So we are not only trying to handle increased volume, but they will also try to make the lab operations more efficient by consolidating the two locations. So those also caused a bit of transition, but we do see a good trend for the long-term to continue to handle the higher volumes and improve the turnaround time.

Andrew Cooper: Okay. Great. Super helpful. And then maybe just one more on sort of the portfolio. I think there was mentioned in the call as well of looking to penetrate the OB space in terms of carrier screening. A lot of times, I feel like we hear people talk about that being bundled with NIPT. So just the latest and greatest thinking there. And then kind of related, I think on the Fulgent Oncology side, you mentioned a near one-stop shop. So just remind us what do you feel like still needs to be added into the portfolio? How do we think about addressing some of those factors and what the time lines might be?

Brandon Perthuis: Yes, certainly. Thanks again for the question. We actually have Larry — Dr. Larry Weiss with us today. So I’ll let him address the Fulgent Oncology question here in a moment. But in terms of our carrier screening market penetration, it’s mostly been in the infertility space. We’ve landed some fantastic long-term clients that are mostly infertility clinics REIs. And you’re correct in that to penetrate the OB space, it is much, much easier to do so if you can bundle it within NIPT. As you’re aware, we currently don’t have an NIPT test. That doesn’t prevent us from selling to the OBs. Again, it’s just easier to do when you can bundle it. So we will be able to target the OBs, especially the OBs that are referring into some of these new clients we have and be able to leverage the continuity there.