Fulgent Genetics (NASDAQ:FLGT) reported first-quarter 2026 revenue of $71.1 million as the company worked through a planned decline in testing volumes from its largest customer while integrating the recently completed acquisitions of Bako Diagnostics and StrataDX.
First-quarter revenue pressured by large-customer transition and claims timing
Chief Commercial Officer Brandon Perthuis said the company ended the quarter with revenue of $71.1 million, down 3.2% year-over-year and 14.6% sequentially, “driven by the reduction in sales to our large customer who has begun transitioning testing in-house.” CFO Paul Kim added that the quarter was also impacted by “timing impact as we work through claims processing backlog.”
- Precision diagnostics revenue of $40.2 million, down 8.8% year-over-year and down 16.5% sequentially
- Anatomic pathology revenue of $25.1 million, down 0.9% year-over-year and down 7.2% sequentially
- Biopharma services revenue of $5.8 million, up 43.2% year-over-year but down 28.0% sequentially
During Q&A, Kim told UBS that the impact from the largest customer was “significant” and that, excluding it, “we do have growth in the precision diagnostics area for this year,” adding that the analyst’s “teens growth” math appeared “consistent.”
Bako and StrataDX acquisition closes mid-quarter; integration priorities highlighted
CEO Ming Hsieh said the company “successfully completed the acquisition of Bako Diagnostics and StrataDX,” which “contributed to our strong first quarter results as we had anticipated.” Kim quantified first-quarter contribution from the acquired businesses at $2.6 million, noting the transaction closed on March 17 and therefore had a limited impact in the period.
Perthuis said the acquisition “adds to our market presence in anatomic pathology and more than doubles the size of our pathology sales team.” He said the focus has shifted to integration, with a key priority being cross-training of the combined sales teams “to sell Fulgent pathology services and vice versa.” He added the integration was “off to a very good start.”
Kim said Bako’s revenue will primarily be categorized as anatomic pathology and that, for 2026, the company forecasts no single customer will account for more than 10% of total revenue, which he described as an improvement in customer concentration.
Product updates: digital pathology, whole genome test enhancements, and PGx reimbursement
Hsieh emphasized continued investment in AI and digital pathology, stating that with the company’s in-house platform, EasioPath, Fulgent is “approaching 100% digital across all our cases.”
Perthuis provided additional details on the company’s whole genome offering, saying Fulgent has integrated Illumina’s TruPath Genome to target variant classes that “historically required separate testing workflows,” including “complex structural variants” and “repeat expansions in difficult to map regions.” He described the company’s goal as delivering comprehensive results “in a single report” so rare disease patients do not have to pursue “sequential tests to get an answer.”
On the AI roadmap, Perthuis said the company went live in the first quarter with a dermatopathology AI tool intended to standardize digital slide orientation. He said auto-rotation is designed to reduce time spent adjusting images, improve consistency, and potentially reduce turnaround time and cost.
Perthuis also said the company received MolDX approval and pricing for its pharmacogenomics (PGx) test. He tied the update to evolving ASCO positioning around DPYD testing for patients being considered for certain chemotherapy drugs such as 5-FU, citing a 2026 ASCO clinical notice urging clinicians to prioritize DPYD genotyping as part of initial diagnostic workup. Perthuis said Fulgent is seeing “a lot of requests” related to DPYD testing, calling the opportunity “very tangible” and “very real.”
Margins and profitability: lower gross margin tied to revenue shortfall
Kim reported first-quarter GAAP gross margin of 30.2% and non-GAAP gross margin of 32.3%. He attributed the decline largely to fixed costs spread over a lower revenue base due to the volume decline and claims processing timing. He said the company expects margins to normalize “as the backlog clears in the coming quarters and as revenue increases.”
In response to a question from UBS about whether the acquisition affected gross margin, management said it did not. “No, there was no impact from the acquisition,” the company said on the call.
Kim reported GAAP operating expenses of $56.1 million, down from $68.8 million in the prior quarter due to “a one-time professional liability expense” in Q4. Non-GAAP operating expenses were $42.6 million, compared with $43.1 million in the previous quarter. Non-GAAP operating margin was -27.7%.
For the quarter, Kim reported a GAAP loss of $24.8 million, or a GAAP loss of $0.08 per share based on 30.9 million weighted average diluted shares. Adjusted EBITDA was a loss of about $15.2 million, compared to a loss of $4.5 million in the prior quarter. On a non-GAAP basis, the company reported a loss of approximately $11.0 million, or $0.36 per share, excluding equity-based compensation, intangible asset amortization, and acquisition-related costs and severance.
2026 outlook reiterated; buybacks reduce share count and adjust EPS and cash expectations
Kim reiterated full-year 2026 revenue guidance of $350 million, which he said represents 8.5% year-over-year growth. Segment expectations remained:
- Precision diagnostics: approximately $168 million
- Anatomic pathology: approximately $162 million
- Biopharma services: approximately $20 million
He said the company expects non-GAAP gross margins of about 39% for 2026, with improvement in the second quarter on higher forecast revenue and further improvement “to approximately 42% by the end of the year.” Non-GAAP operating margin guidance remained -20%.
Kim also provided quarterly revenue expectations, telling Piper Sandler that Q2 should be higher than Q1 and that “the targets are in excess of $90 million per quarter” for Q2, Q3, and Q4, reflecting both base-business positioning and a full quarter contribution from Bako and StrataDX.
Fulgent’s guidance changes were tied to share repurchases. Kim said the company repurchased 2.6 million shares in the first quarter and continued repurchasing into the current quarter with an additional half-million shares “as of today.” He said the forecasted average fully diluted share count for 2026 decreased from 32 million to about 29 million shares, and that the reduced share count has an effect of $0.14 to EPS. Using the updated share count, the company now expects full-year 2026 non-GAAP EPS of a loss of $1.59 per share, excluding stock-based compensation, impairment loss, acquisition-related costs, further share repurchases, amortization of intangible assets, and one-time charges.
On liquidity, Kim said the company ended the quarter with approximately $604.7 million in cash equivalents, restricted cash, and marketable securities. The $100.8 million sequential decline was primarily driven by $56.6 million paid for the Bako/StrataDX acquisition and $40.1 million spent on share repurchases. He also noted the company had not yet received a $106 million federal income tax refund, which he said had been delayed due to a prior-year government shutdown and “constrained resources at the IRS.”
Assuming certain spending levels and excluding future repurchases and non-ordinary-course expenditures, Kim said the company anticipates ending 2026 with about $636 million in cash equivalents, restricted cash, and marketable securities, a figure he said was $49 million lower than prior cash guidance due directly to year-to-date repurchases.
Separately, Hsieh highlighted progress in the company’s therapeutic development business. He said the phase II trial enrollment for FID-007 closed on Dec. 29, 2025, with 46 patients enrolled, and that an abstract for the phase II trial was selected by ASCO as a rapid oral presentation in the head and neck cancer track. Hsieh said the company is encouraged by early efficacy and safety data and anticipates an end-of-phase II FDA meeting in the second half of this year, with a goal of entering a phase III registration trial in the first half of 2027. He also said FID-022 is progressing through phase I dose escalation, with the third dose level completed and the fourth dose level ongoing, and that the company expects to determine the maximum tolerated dose later this year.
About Fulgent Genetics (NASDAQ:FLGT)
Fulgent Genetics, Inc (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.
