Fulgent Genetics (NASDAQ:FLGT) reported second-quarter 2026 revenue of $85.4 million, up 20% sequentially and 4% from a year earlier, as the company incorporated a full quarter of contributions from Bako Diagnostics and StrataDx. Management also lowered its full-year revenue outlook, citing lower collection rates during a transition to a new billing and revenue-cycle-management system.
Chief Financial Officer Paul Kim said Bako Diagnostics and StrataDx contributed $16.9 million of second-quarter revenue. Revenue had totaled $71.1 million in the first quarter.
Billing Transition Pressures Collections and Margins
Management said the final phase of its billing and revenue-cycle-management system rollout delayed billing and claims processing, reduced collections and limited the amount of revenue the company could recognize from tests already performed.
Chief Commercial Officer Brandon Perthuis said the company completed the first two phases of the transition, but discovered in the third phase that certain features and customizations in the prior software had not carried into the new platform. Fulgent has identified the needed features and is implementing them, though Perthuis said it will take time to receive payer feedback.
“We do expect to get back to our historical collection rates in the coming quarters,” Perthuis said during the question-and-answer session.
Kim said that without the collection-rate issue, Fulgent would have reaffirmed its previous full-year outlook and second-quarter results would have aligned with its original expectations. He said the company’s testing capabilities, services and volume assumptions remain intact, while the main issue is the lower collection rate being used to recognize revenue.
Second-quarter GAAP gross margin was 30.1%, while non-GAAP gross margin was 31.3%. Kim attributed the decline to fixed costs being spread across a lower revenue base due to reduced collections. He said gross margins are expected to normalize as collection rates return to historical levels and revenue grows.
GAAP operating expenses increased to $61.8 million from $56.1 million in the first quarter, reflecting the full-quarter integration of Bako and StrataDx. Operating expenses also included a $2.2 million one-time impairment charge related to a customer-relationship intangible asset after the loss of a therapeutic-development customer.
Fulgent recorded a GAAP net loss of $29.5 million, or $1.50 per share, compared with a $24.8 million GAAP loss in the prior quarter. Its non-GAAP loss was $16.2 million, or $0.58 per share, while adjusted EBITDA was a loss of $17.1 million, compared with a $15.2 million loss in the first quarter.
Outlook Revised as Major Customer Transitions Testing In-House
Fulgent lowered its 2026 revenue guidance to a range of $330 million to $340 million, from prior guidance of $350 million. The revised range represents expected year-over-year growth of 2.3% to 5.4%.
The company now expects approximately $161 million to $166 million in Precision Diagnostics revenue, $146 million to $150 million in Anatomic Pathology revenue, and $23 million to $24 million in Biopharma Services revenue for the year.
Management said the revised outlook reflects lower-than-anticipated collection rates and moderated expectations for new business growth. It also incorporates a continuing reduction in revenue from Fulgent’s largest customer, which is moving testing capabilities in-house. Revenue from that customer fell $4.6 million sequentially in the second quarter, and the company expects further declines during the second half.
Kim said Bako and StrataDx are expected to contribute about $53 million during the second half, potentially partially or fully offsetting the decline from the large customer. Fulgent expects no individual customer to account for more than 10% of full-year revenue.
For 2026, the company expects non-GAAP gross margin in the mid-30% range and non-GAAP operating margin in the mid-negative-20% range. It forecast a non-GAAP loss per share of $2.22 to $2.35, based on an expected average diluted share count of about 28 million.
Fulgent ended the quarter with $551.5 million in cash equivalents, restricted cash and marketable securities. Cash declined by $53.2 million from the prior quarter, primarily due to $23.8 million in share repurchases, a $13.5 million legal-settlement payment and $14.1 million used for operations and capital expenditures. The company said it had not yet received a $106.1 million federal income-tax refund because of IRS resource constraints.
Acquisition Integration, AI and Clinical Pipeline Progress
Perthuis said Bako and StrataDx experienced minimal disruption to turnaround times and client ordering patterns following integration. The acquired sales teams have been cross-trained to sell Fulgent’s legacy dermatology and gastrointestinal anatomic pathology offerings, and the combined anatomic pathology sales organization now includes about 40 people.
The company also said it expanded its artificial-intelligence pathology portfolio with an algorithm intended to automate mast-cell quantification in gastrointestinal biopsies. Perthuis said the tool uses a DAB-guided deep-learning approach to distinguish individual mast cells from extracellular staining.
Fulgent plans to go live with early adopters of Epic’s Aura specialty diagnostics platform in the third quarter. The integration is designed to enable genetic-test ordering and results delivery through health systems’ electronic medical records.
In therapeutic development, Chief Executive Officer Ming Hsieh said the company presented Phase II data in June for FID-007, a nano-encapsulated paclitaxel candidate for recurrent or metastatic head and neck squamous cell carcinoma. The company has scheduled an end-of-Phase-II meeting with the Food and Drug Administration for later this summer and is preparing for a Phase III registration trial that it hopes to begin in the first half of 2027.
Fulgent’s second candidate, FID-022, a nano-encapsulated SN-38 treatment candidate for solid tumors, is progressing through Phase I dose escalation. Management 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.
