The pandemic changed the fortunes of a lot of healthcare stocks in 2020. Little-known biotechs and diagnostics companies struggling for survival suddenly found themselves with customers, funding, and stock prices like they had never imagined. The stock of Fulgent Genetics (FLGT 0.29%), a genetic testing company, is up more than 300% this year.
Fulgent entered the year coming off a great 2019. The company had grown revenue 52% and the stock had risen from $4 to more than $12 -- over 200%. The company's broad and flexible testing platform and next-generation sequencing of genomes had caught on with customers. Fulgent could customize tests for customers, for about 5,700 different genetic conditions. In 2019, billable testing volume grew to 58,573, a 160% increase from 2018. If management thought that growth was exciting, COVID-19 was about to redefine the term.
Despite the disruption to traditional testing for cancer, rare diseases, and reproductive health, management was able to develop COVID tests to market quickly, more than making up for the shifting demand. In the first quarter, Fulgent experienced a 75% increase in test volume compared to the first quarter of 2019. That was followed by 1,003% and 4,800% growth in the second and third quarters, respectively.
While the volume growth is astounding, perhaps more exciting is the scale the company is demonstrating. For the nine months ended Sept. 30, operating margin was 62.5% in 2020, compared to 14.6% in 2019. As the testing volume exploded higher, management did not have to add nearly the same amount of expenses. This allowed a greater portion of sales to flow through to the bottom line. After recently increasing full-year guidance, the company shows no sign that the growth will slow anytime soon.