Perfect. Great. Our next session is the management team from Fulgent Genetics. We are very lucky to be joined by Paul Kim and Brandon Perthuis. Paul and Brandon, welcome. Thank you. Thanks for having us. Great. So you guys reported last Friday. Why not give us a quick kind of like overview and then highlights of the quarter, and then anything that you wanted to flag to the audience? Yeah. I'll start with the financial, then I'll turn it over to business who can color in where we sit from a business standpoint and our outlook going forward. So, we reported a quarter of $84.1 million. Revenue came in higher than what we anticipated internally, as well as what the street was anticipating. Our gross margins also came in favorably, as well as the other key financial metrics. We had a non-GAAP income for the quarter, and we raised guidance from $320 million- $325 million. We think that we're gonna be finishing the year on a very strong note from a financial sense. And then Brandon can, you know, color in the status of the business. Yeah. I mean, that was a good financial overview. I mean, the business performed well, as Paul mentioned above, our expectations. I mean, all three business areas are performing well. We break it down into precision diagnostics, anatomic pathology, and our biopharma services. Precision diagnostics was up nicely. Biopharma services was up nicely. We had a down quarter in our AP business, but really was related to a one-time event of changing some billing software and delayed some claims going out. If that would not have happened, I think all three areas probably would have shown growth sequentially year- over- year. AP did still grow year over year. I think it was a great quarter. I think the sales team is executing, really taking advantage of our expanded capabilities, and I think we're in a pretty strong position. Great. So we're gonna dive into, the three business lines that you just mentioned. Maybe starting on the AP side, you guys have gone through like restructuring in the past, like one to two years. Can you just like give us like a quick update in terms of like how much, like what has changed, from maybe two years ago, and then what else that you wanted to fix the business? Yeah. Certainly. I mean, two, two and a half years ago, we did a couple acquisitions. We acquired Inform Diagnostics and CSI Laboratories. Shortly after the acquisition, I think our gross margins were in the mid-20s. That was two, two and a half years ago. And this quarter, we were 44%, 40%, 44%, somewhere around the mid-40s. The last two years, the gross margins have really grinded higher. A lot of that has been us integrating those acquisitions and really implementing Fulgent technology into those acquisitions. Some of the things we've been doing lately on the AP side is investing heavily in digital pathology, which is leading to operational efficiencies, improved throughput, as well as the ability to leverage AI now that these slides have been digitized. I mean, all, you know, areas of our business, we're constantly looking at operational efficiencies, automation, liquid handling, robotics, AI. I think we've done a good job really, you know, improving those operations and making them successful as we tuck them into Fulgent. Okay. Great. We're gonna talk about AI a little bit later, but just in terms of like the sales organization within the AP, like what, what has changed? Yeah. So it's grown. A few things have changed. The sales team has grown just in sheer numbers, as we pick off territories that we did not have salespeople. We've also brought in some new sales leadership, which have done a really good job. We've also tactically revamped some comp plans. We inherited some comp plans that we really didn't like that much on the sales team and how the sales team was being compensated. We really wanted to incentivize them for new business growth to go out there and hunt and find new opportunities. I think the management, the size, and just the restructuring of how we compensate our sales team has led to them closing some nice size wins for us. Do you think right now it's like fully done, or do you expect to hire a few more sales in 2026? How should we? Yeah. On the AP side, yeah. It's still probably a subscale-sized sales team considering the size of our operation. I mean, they're, you know, they're productive, which is great. But there's still green grass out there where we don't have coverage. So, I think in 2026, you'll see that sales team probably grow by another 25%. Okay. Got it. And then, talking about the digital pathology, what kind of like changes that you kind of expect that to be like from a operational efficiency perspective, or maybe like you can hire less people? So, so how, how should we think about the AI and? Yeah. Great question. It's something we're really proud of. I mean, I think we've really pushed the envelope there, and I think we're really far ahead in terms of our competition and our peers in digital pathology. You know, a year ago, pathologists were literally sitting in our office at their desk over a microscope, manually manipulating glass slides. If we wanted to recruit new pathologists, we would have to relocate them and their family to one of our laboratories, for example. Digital pathology has allowed us to recruit nationally. A lot of our pathologists now work from home. The sample shows up at the laboratory, we do the sample preparation, we create the image, and then no matter where our pathologist sits, they can sign those out. One of the big advantages has been our ability to now recruit really top-tier pathologists and top-tier talent. Certainly, it's going to make them more productive as well. You know, a lot of the cost of sales are in the professional sign-out of these things. If we can make them more effective, that's gonna have even more impact on our gross margin. I think, you know, we invested significantly in digital pathology. We recently announced our EZO Path System that we built from the ground up to be our system that we use to view and manage and store these slides. Because we have hundreds of thousands of images now that are clinically annotated, that's the data we're able to use to really train our AI tools. Long-term, AI is going to make our pathologists faster and better, leading to efficiencies. And again, you know, we really pride ourselves on operational excellence. So anywhere where we can make it more efficient, that's what we wanna do. Great. I think the next one is more on, on the AP side. I think about like two years ago, we were talking about how to kind of like utilize the payer contract to, to like add on the NGS services. That has been a little bit slower than expected. Wonder, like, can you give us a quick update where we are right now, and then what are the pain points that you have seen during kind of like the conversion? Yeah. It just didn't happen how we thought it would happen, actually, but it happened in a different way. It's actually worked out quite well for us. We're really proud of the progress we made in managed care. Another area we've invested in some good talent, and we've been able to organically go out there and grow our contract. I think not this past earnings phone call, but the previous, for the first time in a couple of years, we mentioned it 'cause we had made so much progress in managed care and the number of millions of new lives we now have under contract. I think the combination of all of our entities, Fulgent organically and our acquisition, they've given us a robust customer contract list. That's important, right? I mean, people want services performed in network, out of network, patient cost shares are through the roof in terms of copay, coinsurance, and deductible. It is hard to sell if you're out of network, but where we're at now, I mean, we're in a really strong position with managed care. Okay. Great. Do you have an attached rate that you can like wanted to disclose or, any target rate that you want to have? I mean, if you're thinking about in terms of like cross-selling and penetrating the clients with new products and services, it's not lost on us that through our AP business, we have a lot of really good clients, in terms of dermatologists, gastroenterologists, urologists, breast pathologists. It hasn't been a huge focus in 2025 to cross-sell the NGS products. We've been, you know, focused on some other areas, but it's certainly not lost on us that there's value there. We think in 2026, one of the initiatives is going to be carving out a limited number of NGS tests that we think are applicable to that same client base, train that same sales team, and go to market with those products. Perfect. I mean, talking about 2026, how should we think about the AP in 2026? Like high single digit? I mean, 2025's like came on like a really weaker 2024, right? How should we think about 2026? Yeah. We haven't guided to 2026 yet, but I mean, we see momentum in the AP business. We think it's going to continue to grow. We think the operational efficiencies we've made are really beginning to pay dividends. We're gonna be increasing the size of the sales team. You know, not ready to guide yet for 2026 and give out any real concrete numbers, but we think the AP business has momentum behind it. Great. Let's move to precision diagnostic. 16% growth, which really impressed us. What are the drivers, and then how sustainable is the double-digit growth? Yeah. There's been a few different drivers. I mean, we really have made a name and a brand for ourselves in reproductive health. A lot of that has been carrier screening. So our Beacon Expanded Carrier Screen product has done really, really well in the marketplace. You know, we were the first lab to launch a really large panel, 700-plus genes. I mean, that's important in the infertility space. So we've gained significant market share in reproductive health with our carrier screening test. That continued into this quarter, obviously. I mentioned on the phone call, we're now expanding that to 1,000 genes. We now have by far the biggest expanded carrier screening test on the market. There were some questions around clinicians', you know, appetite for a panel that big. Because of the segment we sell into, the infertility clinics, you know, most of these couples are there trying to get pregnant. They're not pregnant yet. The clinicians really want as much risk mitigation as they can during this process. The more they can test for in a pre-pregnancy setting, the better. There is a big appetite for a larger panel in the IVF space. Carrier screening was big for us in the quarter. We've also launched a few new products in rare disease. We launched a new whole genome, with RNA, which is huge. I mean, the literature shows, you know, 15%, 25%, 30% increase in diagnostic yield when you add RNA. We now do that with almost all of our exomes and genomes, which is a big differentiator for us. This quarter, we announced the new ultra-rapid NICU genome, 48-hour turnaround time. I think that's gonna be important. The sort of rare disease pediatric portfolio in terms of capabilities has expanded, and our sales team is leveraging that. Great. I wonder like how do you kind of like break out the, disease area in terms of like revenue, right? So how big is the women's health? How big is the rare disease? Like, can you help us like quantify that? In terms of the market size? No, just the revenue mix that you have right now. Oh, we haven't. We break it out into precision diagnostics, AP, and biopharma services. Within the precision diagnostics, you'd have your rare disease, our oncology business, our pediatric rare disease business. We haven't broken those out more granularly. I think just sort of qualitatively, you know, our reproductive health business is probably our largest business, probably followed by rare disease. Okay. Another thing that people focus on kind of like women's health in general is how do you grow bigger, right? You need to have an NIPT to kind of like go into the OB-GYN channel. You do have a product, but it's still pretty small. I'm wondering how, how do you think about the strategy going forward in that specific area? We don't think, you know, we've penetrated the IVF space fully yet. I mean, we're still closing opportunities in the IVF space. I think the IVF space for us is attractive 'cause it's more centralized, if that makes sense. There's a lot of OB-GYN clinics across the country, but much fewer larger IVF clinics. The impact we've made there has been tremendous. I mean, our turnaround time last month was 8.8 days for carrier screening. I mean, that's incredible. Certain labs out there, several labs out there, two, three, sometimes longer weeks. We believe we still have runway in the IVF setting. The team is doing a really good job closing those opportunities. We do now have an NIPT test. As you mentioned, if you want to penetrate the OB-GYN space, you know, you really need those two together. You know, we did make a decision to launch an NIPT test. We launched a novel NIPT test, but it hasn't been a sales focus yet in a big way to penetrate the OB-GYN market. Still focused on the IVF clinics, but perhaps next year, we could see more penetration in OB-GYN. Do you think the tests might need further improvement given that the space, like, keep talking about, I mean, competitor have like a single gene NIPT? Yeah. There are other competitors doing like a combo test where you have NIPT and carrier screening altogether. Like, how do you think about the role map in that specific case? I mean, our NIPT was a novel NIPT test. I think we're looking for 50 or so single-gene mutations. I think that's the biggest on the market, maybe. I'm not sure, but I believe it to be, as well as really good sensitivity for the deletions and duplications. I believe we test for more micro-deletions and duplications than some of the other labs. The idea was to test for all the common aneuploidies with very good sensitivity and specificity, but also have a larger number of micro-deletions, micro-duplications, as well as the de novo single-gene mutations. I think, you know, we're out there in terms of being in front of the curve. I think at this point, we need to, you know, really perform commercially. We decided to build out the sales team, really focus on calling OB-GYNs. You mentioned earlier, now that we have all the contracts, we're in network. I believe we have the tools to do it. We just need to execute. Okay. In terms of the rare disease, there are lots of competitors out there, right? Now you're also launching the RNA feature, the rapid whole genome sequencing. How do you think you differentiate versus like other competitors in the market, and how do you really gain share? Yeah. I feel like there's a lot fewer competitors today than there was, maybe a few years ago. Look, I think the RNA part is a big differentiator. I believe we're the only laboratory offering RNA in parallel with all of our exomes and genomes. As I mentioned, you know, depends on what literature you cite. You know, it's anywhere between a 13%, 15%, up to 30% increase in diagnostic yield. In the, you know, diagnostic dilemma world, that is massive. That's a huge number. A lot of these clinicians that are seeing these patients, their mission is to solve the case, to give the family an answer, give the family an answer, and also be able to counsel on reproductive risk in the future. If we can solve more cases with RNA, that's going to win us more business. Our turnaround time has been excellent. The quality's been excellent. We have the contracts now. I mean, in terms of probably the biggest differentiator, it is going to be the RNA right now, followed by our turnaround time. Got it. And what kind of like other menus that you wanted to sell in 2026? You touched on women's health, rare disease. Anything else that you wanted to add to the portfolio? There's always something, right? There's always something. Our portfolio at this point is big. I think we offer over 20,000 unique tests across all different, you know, subspecialties. I don't think there's one sort of big thing that stands out that we need to launch in 2026. I think 2026 is, you know, more continued commercial execution, growing out the sales team, gaining more market share in rare disease and reproductive health. Even in the biopharma services, you know, the capabilities have expanded so much in the last year or two, multi-omics, launching, you know, proteomics and single-cell and spatial, all on relatively modest R&D spend, if I might say so. Nothing really stands out in terms of what we need to execute on our plan for 2026. I think it's just gonna be blocking and tackling and good sales teams, good sales team execution. How big is the sales force right now? Where do you want it to grow to? I think all in, all done, if you include sales, marketing, I think managed care is in there globally. We have a few international as well. I think we're just shy of 80, just shy of 80. I don't know that we have an ideal number yet in our minds on how big it needs to be. We believe to be subscale. We believe as we continue to hire good salespeople, we're starting to see those returns. I think we're being really opportunistic, you know, when the right talent presents itself, when the right territory is looking right for us, like we think we can make an impact in that territory. It is more sort of opportunistic hiring than having a plan like we need to hire 100 people. That's not really our MO right now. putting the right talent in the right territories, and so far, again, the sales team has been productive. I think next year that's gonna be the same, same plan. Is that 80 for total company, or just like precision? That's a total company. That would include anatomic pathology, include AP, precision diagnostics, all areas of precision diagnostics. As you can imagine, some of these call points are different, vastly different perhaps. Right. That would include the oncology team, the women's health team, the rare disease team, and, and marketing as well would be, you know, all in. Got it. Cool. And then you talk about biopharma services, great quarter. People are concerning about like the R&D spend from like pharma companies. Like, you saw all the headlines, but how do you think about the pipeline so far? Yeah. I mean, we haven't seen much of an impact there, but our base is relatively low. I mean, biopharma services for us, we started, you know, a couple of few years ago. When we launched it, it was only next-generation sequencing. That actually limited, you know, our addressable market because so much of biopharma now wants multi-omics. When we realized NGS wasn't enough, that's when we went on a mission to launch all these new platforms. Now the addressable market's much bigger. Biopharma services is very transactional. A biopharma company would put out an RFP looking for certain technologies. If you have those technologies, you can bid on it. If you don't, you're not in the process. Now that we have all of these, we're able to bid on a lot more of these programs, and we're winning a lot of them. Some of these are with really big, strong, long-term biopharma partners. Because our base is relatively low and it's relatively new to us, we see this movement kind of up and down. We've been calling it lumpy, just the nature of the business. I think if you zoom out, you know, it's up and to the right. It's growing. It's looking good. You're still gonna see quarter-to-quarter variability until we hit a more steady state. In terms of the pipeline, I think the team's doing a great job building out the pipeline. These can be long sales cycles as they go through a multi-month, multi-month RFP process, and then a multi-month sample procurement process, and then we get to do our work. We don't often get to bill for the project until the project is complete. Once we complete the project, you know, we bill for the project. I think, you know, to kind of level out the lumpiness, just continue to build that pipeline, get more scale, and then it'll be a little bit easier to sort of forecast and project. Okay. Got it. I wanted to go back to precision diagnostic. Forgot to ask one more question on the Foundation Medicine. Mm-hmm. Partnership that you guys have. Where we are right now, and should we think about any like big revenue contribution in 2026 or maybe beyond? We hope so. We hope so. We're really proud to partner with Foundation Medicine. We think they're a market leader in their space. They have a big piece of the puzzle with their tumor profiling and their FoundationOne test. As the NCCN guidelines have been updated to emphasize more of the need for germline or hereditary testing, they didn't have that piece of the puzzle. We decided to partner up. We do a great job with germline and testing. I would say it's gone a little slower than we all like, but I think that's just the nature of working with a big company and a big business. I think, no pun intended, but they're building a nice foundation. They're building a nice foundation for the partnership. I think they wanted to make sure that as it scaled, we could deliver on our promises, right? Our turnaround time, our integrations, the ordering, the reporting. Did not wanna get over our skis too much. 2025 was a quote-unquote slow year for us, but I think the pieces are in place, for 2026 to be much better. Have you started to see the volume coming? We have. It's not as big as we'd like. Never is, never is. But we are starting to see the momentum. And look, they have a world-class sales organization. I think they're a world-class company. I think Foundation Medicine and Roche are doing a great job. I think this partnership together is the best way to deliver cancer testing with somatic and germline together. Okay. Great. So maybe final thing on the whole business. I know you're not ready to give outlook, but can you talk about like what's the percentage for 2026? I think our overall capabilities are much stronger, and it continues to get stronger. I think, you know, Fulgent, you know, will continue to make balanced and rational business decisions. I think the possibility of M&A is definitely in the picture. We haven't done one in a while, but we have done several, you know, since the COVID era. I think the key takeaway, you know, with that is we made those acquisitions work. The numbers and the metrics that we talked about today, these are all organic figures and organic improvements. We raised their outlook twice, and these financial metrics, they just continue to get better for the business. I think the other thing is on the therapeutics development, we are in phase two with 007. We're in phase one with 022. The pipeline and the science, it continues to build. The key takeaway there is, first and foremost, the validity of our platform, and the science and the data. Having said all of that, we made it not impact our financials that much, meaning that our overall spending has been very, very efficient. I think in 2026, the spending for the therapeutics development, you know, will continue to increase. You know, it might potentially double our spending for this year, maybe something a little bit less. Even if it doubles off a figure that might be, say, between $20 million-$25 million of total cash spend, which is, you know, the projected spending for 2025, it is certainly, right, not a material part of our, you know, cash balance. I think the other good thing is with the laboratory services business, that is non-GAAP profitable already. You know, with the continued growth in the top line and the betterment, the continuous betterment of the financial metrics, I think our, you know, overall cash balance should be still very, very healthy. When we gave our latest outlook, we projected the cash balance to be approximately $800 million at the end of 2025, and that surpassed our original expectations. That includes, you know, doing stock buyback, some stock buyback. You know, we bought some ancillary kind of assets to better our business. You know, we invested in capital. You know, we've been hit with inflation for a labor cost, just like all organizations. Even with all of that, the cash forecast, you know, is better than what we originally anticipated, and it's even better than what we anticipated during the middle of the year. I think the key takeaway is, you know, even with the penetration, and the expansion of our business, you know, with both of the businesses, we are very financially responsible. Great. A lot to follow up on that one. Maybe first on the pharma business. The 007 is going to present at ASCO in 2026, right? What other catalysts should we watch for after that? Are you going to see more partnership coming up or like. Yeah. There was a go and no-go decision to make on another indication. Yeah. How should we think about that? You know, Brandon and I can talk, and we will talk about the therapeutics development business, but we have our limitations, right? I mean, the person that can give you the true insight is Ming, and, you know, he's not here. He had to, you know, be somewhere else. But, you know, we will, you know, address your, you know, basic questions. The key catalyst, key catalyst is going to be the completion of phase two and entering phase three. I think that's probably not a surprise to people that are very familiar with the biotech, you know, area. I think, you know, phase three is, you know, the key study where people really take a close look at the science as well as the approach, you know, for drugs. That is going to start happening in 2026, for 007. For 007, that is a very lucrative area, because, you know, the market that we are initially targeting is the head and neck. There have been some transactions and news, right, in the biotech sector, you know, for that. We know that the compound, right, has been proven. The delivery platform and the science, you know, all point to betterment than what we originally, you know, hoped. You have that as one of the key catalysts, 007, going from phase two to phase three. I think the other thing which will support, right, our approach and the platform is going to be 022, you know, which, you know, targets the various cancers around the organs, whether it be colon, liver, pancreas, bile duct, and lung as well. That phase one study has begun. I think the other, you know, key takeaway is, the better the science is, and the better, you know, the deeper that you get, you know, into, you know, various drugs, it's easier for you to launch, right, you know, additional therapies, you know, within that platform. We think that 2026 is gonna be a very exciting year for the company. Great. I just wanted to double confirm. You're probably gonna double the cash burn for the business, roughly like $50 million in 2026, but we're able to kind of like using the probability that come out from the lab to offset? Yeah. I think 50 is on the high side. If we were to estimate it, you know, now it's probably somewhere between 35 and 50 on a cash basis. You know, we anticipate the laboratory services business to, you know, continue to be successful and expand. That cash figure, it doesn't scare us. You know, the other thing is, the science should be and the yardsticks, right, and the catalyst should be much more evident, right, with that spending. Got it. Talking about the probability on the lab, like how much we can go further? Like what are, do you have any cost-out program or maybe like efficiency that can improve like the gross margin? Oh yeah. For you. Oh yeah. I'll kind of tee it up and I'll, you know, turn it over to Brandon. That's a very good segue. You know, people are familiar with what we achieved during COVID. I think the key takeaway with that isn't the test for COVID. It's not even really the numbers or even the financials. I think the key takeaway is, you know, we know how to scale up a business in a successful way, and we're ready to do so. I think that people see some of that, right, through the integration and the betterment that we made to the financial metrics after we bought two companies during the COVID era. The revenues we talked about, our revenues pre-COVID were $30 million diagnostics company. Now we're $325 million. Yes, we bought a couple of companies, but the growth, and the metrics that we've been talking about here for the last, I think, almost two years, they've all been organic. On the gross margins, getting back to your point, you know, after the COVID falloff, our gross margins were somewhere in the mid to high 20s, right? And in the last quarter, on a non-GAAP basis, we're at 44% point something, right, between 44%-45% gross margins. On a GAAP basis, I think it's like a point lower, something like that. And even, say like six quarters ago, our targeted gross margins for the laboratory services, we wanted to get to something close to 40%. And then once we hit 40%, we're a little, you know, reserved. We wanted to make sure that we can stay there. It seems like we are staying there and we kind of are going past that. That is, you know, through our process, through our ability to integrate, through streamlining. You know, the utilization of technologies and future technologies really has not taken hold yet. I think that I will turn it over to Brandon, who can talk about, you know, our background in technology and the utilization, you know, of, you know, AI. I know that is kind of a catchword, but there is a real, tangible, right, near-term catalyst, you know, that can, you know, make our financial metrics, particularly gross margins, you know, better through the utilization of AI. I will turn it over to Brandon, who can, you know, color that in. Yeah. Just real quick. I know we're a little bit short on time. I mean, we're proud of the success we've had with our gross margins. It meant the focus of the company. If we can continue to make the lab more efficient through automation, through robotics, liquid handling, if we can make our pathologists and our medical doctors across the entire company, including our NGS sign-out directors, more efficient, it's going to continue to get those gross margins to grind higher. We haven't given any long-term forecast for gross margins, but the expectation is to continue to invest in these areas, and they will continue to grind higher. Got it. We're about time. Final question on capital allocation. Mm-hmm. M&A side, what areas that you wanted to kind of like invest into, like on the lab or still like adding more assets on the therapeutic side? Or how should we think about the buyback? Not on the therapeutic side. Therapeutic side, we have a very clear, right, path of getting better science and data. And we talked about the catalyst. On the laboratory services side, I'll turn it over to Brandon. Yeah. I mean, look, I think we were gonna, I think we forecasted end of year with $800 million in cash. So, I mean, we certainly have some optionality there. We will continue to invest in sales and marketing. I think we will continue to invest in our operations. You know, we've recently acquired some buildings. We built some new laboratories. We've consolidated the laboratories. We haven't talked too much about that, but we went from, through acquisitions, we went from five or six laboratories to two or three laboratories, centralizing everything, improving operations. And then the investment when we're making AI is going to continue to make us more efficient. Paul and I and, and Ming and everyone in the company, really all the senior executives, we do spend a lot of time looking for new M&A opportunities. The two we've done have worked very well for us. We're proud of the integrations we've done there. We believe there's other targets out there where we can do similar things, where we can take the Fulgent technology platform and put those in businesses to improve those businesses. M&A is a top priority for us, but if we do another one, we wanna make sure it's the right one and is in high probability of success. It's probably just a matter of time. Okay. buyback? We've done some buyback. We've done that too. We didn't do any last quarter. I think the takeaway with capital allocation is we're not hamstrung, right? We can do all those things, and we can do them concurrently. With the team that we have and the bench and the depth, right, and the capabilities that we have, we like where we sit. We think that we're worth more than what we're valued at. In terms of our overall capabilities and what we can do, we like our positioning. Okay. Great. I think we're about time. Thank you so much for joining us. Thank you. Thank you. Thank you. Thank you. Thank you.