Fulgent Genetics (NASDAQ:FLGT) shares are soaring 16.7% at 11:30 a.m. EDT on Thursday after New York City selected it to provide COVID-19 testing services for its public school system.
A slowdown in doctor visits slowed demand for Fulgent Genetics genetic tests for cancer patients and parents-to-be, but it's more than making up for that slowdown by providing COVID-19 testing to government and commercial customers.
The healthcare company performed 180,513 billable tests in the second quarter because of COVID-19 testing, up 1,003% from the same quarter last year. As a result, Fulgent Genetics sales jumped 105% year over year to $17.3 million and its adjusted earnings per share increased to $0.17 from $0.06 one year ago.
The strong performance is expected to continue. Growing demand for COVID-19 testing has management expecting quarterly testing volume will eclipse 700,000 tests per quarter, which has it forecasting full-year sales of $135 million.
That revenue outlook may be conservative, though. On Wednesday, New York City Health announced it will use Picture by Fulgent, an at-home COVID-19 test, to evaluate students and workers in its public education system.
Fulgent Genetics expects its nasal-swab tests will be used to evaluate "hundreds of thousands of students across approximately 1,600 locations as they return to school in September and over the next several months."
Picture by Fulgent is a reverse transcription polymerase chain reaction, or RT-PCR, test with a reported 99.9% sensitivity in detecting COVID-19. Its high sensitivity rate makes it an attractive option for governments and businesses eager to safely return to normal operations.
Fulgent Genetics also announced on Thursday it will automatically test for influenza A and influenza B in all of its tests too, making it even more useful as we head into the traditional flu season.
Clearly, COVID-19 testing is a significant revenue tailwind for the company this year. However, it remains to be seen how long testing demand will support the growth. If COVID-19 testing demand disappears, then Fulgent Genetics' core testing business will have a lot of heavy lifting to do to fill the gap. Nevertheless, the genetic-testing market could be worth $10 billion by 2022 globally, so the company's core business offers a substantial long-term opportunity to increase its revenue.