Fulgent Genetics (FLGT 1.43%), a genomic testing company focused on precision diagnostics and therapeutic development, reported better-than-expected results in its Q2 2025 earnings release dated August 1, 2025. The company posted GAAP revenue of $81.8 million, comfortably surpassing the analyst consensus GAAP revenue estimate of $76.2 million. On a non-GAAP basis, earnings per share reached $0.07, outperforming the anticipated $(0.18) non-GAAP loss. These results reflected strong momentum in the Laboratory Services business and translated into a raised full-year 2025 core revenue outlook of $320.0 million. However, despite the top-line and non-GAAP earnings outperformance, Fulgent reported a wider GAAP loss due to a one-time impairment. The quarter highlighted revenue growth, margin improvements, and strategic progress, balanced against rising operating expenses and ongoing GAAP losses.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Non-GAAP) | $0.07 | ($0.18) | $0.15 | (53.3%) |
| Revenue (GAAP) | $81.8 million | $76.21 million | $71.0 million | 15.2% |
| Non-GAAP Gross Margin | 44.2% | 40.1% | 4.1 pp | |
| Adjusted EBITDA | ($3.0 million) | ($0.7 million) | 329% | |
| Cash, Cash Equivalents & Investments | $777.5 million | N/A |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About Fulgent Genetics and Business Model
Fulgent Genetics is a company specializing in precision diagnosis through advanced genetic testing and the development of innovative therapeutics. It operates with two main business pillars: Laboratory Services, which delivers a broad menu of genetic and diagnostic tests using proprietary technology, and Therapeutic Development, which focuses on new cancer treatments using nanoencapsulation platforms for more effective drug delivery.
The core strength of the company's Laboratory Services is its ability to rapidly develop and launch genetic tests. This flexibility allowed Fulgent to respond during the COVID-19 pandemic and now positions it to meet demands in reproductive health, carrier screening, and rare disease diagnostics. Its key areas of focus include product innovation, expanding partnerships, and compliance with healthcare regulations.
Quarterly Developments and Segment Performance
The quarter was defined by robust growth in Laboratory Services, which continues to drive the majority of the company’s revenue. Core revenue reached $81.7 million, up 16% year over year, with COVID-19 testing making up a negligible portion. Management credited reproductive health diagnostics, expanded carrier screening under its "Beacon" product family, and strong legacy test volumes as central to this growth. New client wins, such as contracts with the U.S. Department of Veterans Affairs and Foundation Medicine, are expected to provide upside and contribute to market share gains as onboarding progresses.
Significant investments in digital pathology also stood out. The switch to digital slide processing and growing use of artificial intelligence (AI) in laboratory workflow were noted as productivity enhancers. Digital pathology allows remote reading of sample slides, increasing recruitment possibilities for specialized pathologists and helping improve turnaround times.
In the Therapeutic Development segment, Fulgent pressed forward with clinical trials for cancer drug candidates based on its nanoencapsulation technology. FID-007 is undergoing a phase 2 trial, and FID-022 is entering phase 1. Both represent longer-term potential. Clinical investments in these programs draw on the company's sizable cash reserves and represent a future growth lever.
The biopharma services division also expanded, offering a broader range of services to pharmaceutical clients. Revenue from anatomic pathology (the laboratory analysis of tissue samples for disease diagnosis) returned to year-over-year growth after prior investment in digital systems and new sales hires. Management acknowledged that sequential fluctuations are likely, particularly in biopharma services, due to the project-based nature of client work.
Profitability and Financial Position
Gross margin improved to 44.2% (non-GAAP), up from the margin in the prior-year period. Adjusted EBITDA, a measure of operating profit excluding certain costs, was a loss of $3.0 million, widened versus the same period last year.
GAAP net results showed a larger loss because of a $9.9 million one-time, non-cash asset impairment. General and administrative, as well as sales and marketing expenses, each rose, reflecting ongoing investments across both major business lines. The company continued to repurchase its own shares, buying back approximately 130,000 shares for $2.2 million and totaling $110.4 million in buybacks since March 2022. Total liquidity stood at $777.5 million in cash, cash equivalents, restricted cash, and investments in marketable securities as of the end of the quarter, supporting both pipeline development and potential further share repurchase activity.
Looking Ahead: Management Guidance and Investor Considerations
Management raised its FY2025 core revenue outlook to $320 million, a $10 million increase from previous guidance, citing strong order momentum and new client wins. The company now expects a GAAP loss of approximately $(2.10) per share for FY2025, reflecting the one-time impairment taken in the second quarter, and projects a smaller non-GAAP loss of $(0.35) per share for FY2025. The cash balance is forecast at approximately $770.0 million as of December 31, 2025, after accounting for continued investments and potential buybacks.
Fulgent does not currently pay a dividend. Areas for investors to track in coming periods include progress in the clinical pipeline and responses to industry regulatory changes. Management also continues to monitor developments around laboratory-developed test regulations, which may impact future operations and compliance requirements.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
