Fulgent Genetics, Inc. (NASDAQ:FLGT) Q3 2023 Earnings Call Transcript

Brandon Perthuis: Yes, certainly. No, it is. And we’re still continuing to sort of [full despite] (ph) that acquisition and doing the work there to implement our technologies, our procedures and the focus has been improving the operation and improving those margins. I think we’re making some good process there — good progress there. But perhaps taking a little bit longer than we anticipated to work through that acquisition, but things are generally trending in the right direction. It’s a pretty stable business, you’re right. So there a little bit of a downtrend that we saw, could be a little bit of seasonality into the back half of the year. We are monitoring our accounts for profitability. So to a very small degree, we’ve exited some areas where maybe we didn’t have favorable reimbursement or for whatever reason, the mix wasn’t a profitable account for us.

So we are looking into some account level profitability. That may play a small role in it. But long term, we’re continuing to invest in that business. We’ve made some changes into the go-to-market strategy and sales structure. We are onboarding some additional salespeople in the back half of this year and early next year. We believe we have an incredible product offering in AP, our subspecialty trained pathologists are some of the best in the United States. Turnaround times are fantastic. So we do believe it’s an area we can grow and hopefully, some of the investments we’ve made recently and are continuing to invest will pay off into next year.

Andrew Cooper: Okay. Great. That’s helpful. And then just on Fulgent Oncology, I know last quarter, we talked about adding some incremental heads starting to build that rollout beyond the West Coast where you initially started. So would love just an update on sort of how that’s going, what the reception has been, maybe where you are in some of those hiring processes that I know don’t happen overnight.

Brandon Perthuis: Yeah, thank you. They certainly don’t happen overnight. And as you’ve seen, we are quite selective with who we onboard into the sales team. We have brought on two new headcounts. They’re not on the West Coast. They’re in different other territories. So that geographical expansion we talked about is happening. There’s obviously a ramp period for these new reps. They don’t step in selling on day one, even though they would love to. But the reps we’ve brought on board are industry veterans, they’re industry experts. So they do bring with them that client level expertise and market expertise. So we are enthusiastic about their potential long term to drive new sales for Fulgent Oncology. And we’re continuing to look for additional sales talent.

So — but again, it’s sort of more of an opportunistic thing when we find the right people in the right territories. We don’t have a ton of open positions right now that we’re just trying to fill. So we’ll continue to do that. The product offering is going well. I think we’ve done a good job with that rollout. So it’s something that’s a long-term vision for the company, and we’ll continue to layer on capabilities and salespeople as we move forward.

Andrew Cooper: Okay. That’s helpful. And then maybe just one on Beacon as well. Pretty big immediate step-up early in the year in terms of the volumes and the share gains there. So just would love any commentary on sort of whether that’s stabilized? Are you continuing to take share in that IVF setting? And then what are some of the guideposts we should really be looking for as we think about that build out in that initial effort to make the transition into the OB-GYN setting as well?

Brandon Perthuis: Well, as we’ve discussed before, I mean, there was massive disruption in that space, right? So clients were left without a provider on short notice. So those clients had to find a new lab relatively quickly. So it was certainly hectic there for a while for the clients as well as for Fulgent and other laboratories. But most of that business had to find a new home and it did. And like as you said, Fulgent benefited tremendously from that. I think what we’re seeing now is some of those clients were a bit rushed in their decision-making process. And perhaps not entirely pleased with some of the laboratories they’ve chosen for a variety of reasons, whether it’s panel content, turnaround time, customer service. So now what we’re seeing is clients have had the time to digest everything now seeing that Fulgent may have been a better choice.