Fulgent Genetics and Why They Are Worth Watching

What is Fulgent Genetics?

Genetic testing is somewhat new in the grand scheme of medical science and study, but it’s opened the door to many discoveries and increased the ability to diagnose conditions and even the likelihood of developing certain conditions. People are even doing genetic testing to find out more about their heritage and backgrounds. Fulgent Genetics is a company that specializes in genetic testing. They process everything in their US laboratories and private server centers. They offer a variety of tests that include whole genome sequencing, mitochondrial sequencing, and CLIA/CAP quality sequencing. They also offer tests for over 800 rare diseases and over 18,000 single genes.

The need for this type of testing is growing and increasing in use as more factors that tie DNA traits to conditions and diseases are discovered, and as people want to understand their own health needs and possible future developments. However, this type of testing does tend to cost more than the average person wants to spend. With the ongoing Covid-19 situation, medical testing and reliable testing facilities are vital to understanding and diagnosing this world-altering disease. Therefore, companies like Fulgent Genetics have seen a sharp increase in production and profit from this current need. Because of this steep change, more people are looking at genetic testing facilities as options for investment and stocks.

The History of Fulgent Genetics

Fulgent Genetics was founded in 2011 in Temple City, CA by Ming Hsieh, a Chinese born American entrepreneur. The priority of the laboratory was on therapeutic medicine. This focus expanded when Dr Hanlin Gao, who also goes by Harry, joined the team the following year and Fulgent Genetics began to develop diagnostic genetic testing. Genetic testing was already an established field that showed steadily increasing market and medical need. Although not the first in genetic testing, Fulgent Genetics was the first clinical laboratory offering copy number variation detection by the use of NGS technology in the US.

The company also had a goal of making this type of testing more affordable and therefore more available to people who need it or simply wanted it for their own personal knowledge and preparations. This allowed more people to take advantage of these services, widening the market.

In 2013, they began offering genetic tests. Three years later, Fulgent Genetics was able to increase its catalog of test options. In 2017, they were able to branch out into even more areas, including carrier screening which are tests for parents to see the likelihood of their passing on genetic issues to their children. This carrier screening created the perfect opportunity to join forces with the Precision Genomics Laboratory (PGL), which uses genomics to improve patient care, increase education, and enhance research. The PGL is a combined effort of the Institute for Genomic Medicine and the Department of Pathology and Cell Biology.

This partnership between Fulgent Genetics and the PGL worked in collaboration with the Department of Obstetrics and Gynecology at Columbia University Irving Medical Center to offer more availability of their testing and more options. Combining all the resources and technologies allowed Fulgent Genetics to grow even more, setting it up to handle the sudden needs that arose during the pandemic. While the world was facing the problems of major shut-downs and quarantines, as well as the uncertainties as experts tried to find out more about Covid-19, Fulgent Genetics opened a laboratory in Houston, Texas on August 28, 2020, and began to create Covid-19 tests. They teamed up with Echo-Factory and began to send out at-home testing kits for individuals wanting to test themselves for Covid-19 without leaving their homes.

Today, the company has about 120 employees and has made massive impacts on the ability to test for various diseases and genetic conditions. They’ve provided answers for countless people needing to know more about their own health and the health of their family. They’ve certainly left their mark in the field of medical testing.

Fulgent Genetics Financial History

While Fulgent Genetics has seen a sharp rise due to the demand for Covid-19 testing, some worry that this will only hurt the company in the long run. When the results of the pandemic are no longer looming over our lives and people begin to feel safer with vaccine availability, the assumed outcome will be that Fulgent Genetics sees a drop in their revenue. However, though this is likely true, it doesn’t mean the company will suffer. Fulgent Genetics uses next-generation sequencing for its testing. This type of testing has risen in value worldwide, projected to be worth $10.5 billion by 2022. $3.6 billion is expected from US sources.

While revenue did see a rise of 28% each year for the past three years, that’s not the only area that Fulgent Genetics that has seen great success. Share prices have risen 118% during those three years as well. When other companies showed similar growth, they went on to continue with their upward climb for decades. It’s a good indicator for those who are interested in investing in Fulgent Genetics.

However, there is a lot of room for concern as well. Much of this growth is solely due to their work with the Covid-19 testing. Once the need dies down, many think Fulgent Genetics’ stock and revenue will drop drastically. In fact, it’s already showing. On May 10th, Fulgent Genetics shares closed with a 60% drop from the past three months. It was down to $68.47. Despite this, there are still many who are positive about the company’s future.

When Fulgent Genetics first started, they were not alone in their area of expertise. There were some major players on the field that could’ve easily overtaken the new company, such as Illumina and Life Technologies and Pacific Biosciences. The biggest thing Fulgent Genetics had going for it was the focus on affordable and available services. This goal was able to carry them further and helped them to stand out. This led to forming partnerships and joining others in order to increase their services and reach.

Genetic testing has been a promising and profitable area for a while now, but the biggest drawback has always been the costs and the lack of ease in accessing the resources necessary. Time has also been a concern, with results always taking a while and the understanding and reading of the data. Fulgent Genetics started out with these issues in mind and worked toward tackling them in order to overcome these stumbling blocks and create a better option for a more general customer base. Fulgent Genetics has managed to maintain this focus throughout its lifespan, continuing to see the benefits of this mindset.

While the jump in revenue has shone the spotlight on Fulgent Genetics, the expectation is that this level of growth won’t last. However, genetic testing has remained a profitable area of investment and has seen steady growth since it started. Maintaining the same level of growth that was seen during the height of the pandemic isn’t possible. There will likely be a drop in earnings due to the drop in Covid-19 testing needs. However, the drop is not likely to negatively impact the value of Fulgent Genetics overall. Many investors are still looking to this company as a smart choice.

One way Fulgent Genetics could silence some of the concerns over its potential growth would be to form agreements with some major insurers as an in-network provider. It seems the reasonable course of action since the company can offer such low-cost testing and is in the limelight due to its participation in Covid-19 testing. It’s been reported that when asked about this very thing, the management of Fulgent Genetics stated that this was being considered and that discussions were already happening in regards to this. The hope of many who are watching the company is that an agreement will come within the year. If the company is able to form these kinds of relationships with some insurers it would show a steadier increase in revenue and boost the top line with each new agreement.

Fulgent Genetics is optimistic about its future. They predict that although Covid-19 testing will likely and hopefully go down, the testing they were already doing prior to the pandemic will increase. They also have a contract with the CDC to continue their Covid-19 testing and to find variations of Covid in order to further learn about this infectious disease.

They have also made some significant investments into some Chinese companies in order to further broaden their hold on the genetic testing industry. CEO Ming Hsieh has indicated that they plan to continue investing smartly to gain more growth and traction in this technology and field of study.

Ming Hsieh-CEO of Fulgent Genetics

Born in 1956, Ming Hsieh grew up in the capital city of Liaoning province, Shenyang in China. His family had been upper middle class and had connections to the old government through his grandfather, who had been an official of high rank. Due to this connection, his family faced persecution and had to move in 1966. As China dealt with and changed from the results of a cultural revolution, Ming Hsieh and his family went to a small village near Panjin. His formal education stopped at this point and he wouldn’t receive any further formal education for another ten years. He was only ten years old and he began to learn a trade from his father. Having been trained, his father, in turn, taught Ming Hsieh electrical engineering and together they began to build a simple power system for the village that was not their home.

Ming Hsieh knew his uncle had left China and went to America for education, finding success after attending the University of Southern California and earning a Master of Science in mechanical engineering, then going on to work for TRW Inc. a corporation that dealt with many different types of business from aerospace to credit reporting. Ming Hsieh decided to follow his uncle’s example.

He went to the South China Institute of Technology in Guangzhou for two years, then transferred to the University of Southern California when he was 24, with the help of the inheritance he received from his grandparents in Taiwan. He earned his Bachelor of Science in Electrical Engineering in 1983 and his Master of Science in Electrical Engineering in 1984. Ming Hsieh decided to stop at this point to worm for a few years, despite his parents wish for him to continue his education to reach a Ph. D. He began to work at International Rectifier as a circuit designer for over two years. After that, he wanted to branch out on his own and started his own company that offered a high speed, fully automated biometric fingerprinting system. He called his business Cogent Systems Inc. and soon found success through some fairly large contracts with places that included the Department of Homeland Security, the Royal Canadian Mounted Police, the FBI, and the Federal Bureau of Persons.

Ming Hsieh has shown a continued dedication to his beginnings in electrical engineering. In 2006, he made a donation of $35 million to the University of Southern California’s Viterbi School of Engineering, specifically the Department of Electrical Engineering. This was on the 100th anniversary of when the department was founded and in honor of this donation, the department was renamed the University of Southern California Ming Hsieh Department of Electrical Engineering four years later. He is now on the board of trustees for the university and made another donation in October of 2010 for $50 million for cancer research.

His philanthropy doesn’t stop at the University of Southern California either. He donated $5.5 million in November of 2007 to the West Virginia University’s Eberly College of Arts and Sciences. This donation was made specifically to the Department of Forensic Investigative Sciences. The West Virginia University has the biggest Crime Scene Training Complex in the US and the department is one of only ten in the country. Because of his donation, the university changed the name of one of their buildings to the Ming Hsieh Hall.

He has also donated $1 million to the Children’s Hospital in Los Angeles in 2014. His skills and development of this biometric system paved the way for his election as a member of the National Academy of Engineering in 2015.

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