Good day and welcome to the Fulgent Genetics Third Quarter 2021 Earnings Conference Call. At this time, I would like to turn the conference over to Nicole Borsje, Investor Relations, please go ahead, ma'am.

Great. Thanks. Good afternoon and welcome to the Fulgent Genetics, third quarter 2021 financial results conference call. On the call today are Ming Hsieh, Chief Executive Officer, Paul Kim, Chief Financial Officer, Dr. Larry Weiss, Chief Medical Officer, and Brandon Perthuis, Chief Commercial Officer. The Company's press release discussing its financial results is available in the Investor Relations section of the Company's website, fulgentgenetics.com. An audio replay of this call will be available shortly after the call concludes. Please visit the Investor Relations section of the Company's website to access the audio replay. Management's prepared remarks and answers to your questions on today's call will contain forward-looking statements. These forward-looking statements represent management's estimates based on current views and assumptions which may prove to be incorrect. As a result, matters discussed in any forward-looking statements are subject to risks, uncertainties, and changes in circumstances that may cause actual results to differ from those described in the forward-looking statements. The Company assumes no obligation to update any of the forward-looking statements it may make today to reflect actual results or changes in expectations. Listeners should not rely on any forward-looking statements as predictions of future events, and should listen to management's remarks today with the understanding that actual results, including the Company's actual future results may be materially different And what is described in or implied by these forward-looking statements. Please review the more detailed discussions related to these forward-looking statements, including the discussions of some risk factors that may cause actual results to differ from those described in these forward-looking statements contained in the Company's filings with the Securities and Exchange Commission, including the previously filed 10-K for the year ended December 31st, 2020, which is available in the Company's Investor Relations website. Management's prepared remarks, including discussions of earnings and earnings per share, contain financial measures not prepared in accordance with accounting principles generally accepted in the U.S. or GAAP. Management has presented this non-GAAP financial measures because it believes they may be useful to investors for various reasons, but they should not be viewed as a substitute for, or superior to, the Company's financial results prepared in accordance with GAAP. Please see the Company's press release discussing its financial results for the Third quarter of 2021 for more information, including a description of how the Company calculates non-GAAP income and income per share, and a reconciliation of these financial measures to income and income per-share, the most directly comparable GAAP measures. With that, I'd now like to turn the call over to Ming.

Thank you [Indiscernible]. Good afternoon, and thank you for joining our call today to discuss our third quarter 2021 results. We heard a very good, strong third quarter, with our core business being green, momentum, [Indiscernible] COVID infections with the Delta awareness through a meaningful uptake in our COVID testing warning in the quarter, I will cover some highlights from the third quarter before turning the call to our Chief Commercial Officer, Brandon Perthuis, to discuss the products and the go-to-market updates. And Paul Kim will discuss the power financial results and outlook in detail. Take a look at our third quarter results: Revenue total of $228 million, 124% compared to third quarter of 2020 and up of 48% sequentially. We delivered approximately 2.2 million tests in the quarter, more than doubled the volume of our third quarter last year. Paul will cover the details on the [Indiscernible] between our core and COVID business in the quarter. For the high-levels, both [Indiscernible] up for businesses outperformed the guidance we set for last quarter. Our core business grow almost 300% year-over-year to over $40 million, due to the strength across the key areas, including KSI, CSI, and our revenue from Jamie in China. We also saw a meaningful increase in revenue from our current track with the CDC deals with a Web-spread, increase. We have seen in [Indiscernible], positive rate. We continued to drove strong profitability, and a generate of $3.93 per share in GAAP EPS and $152 million in operating cash flow. We were pleased to achieve the results this quarter that exceeded our expectations across-the-board, while our business has benefited from [Indiscernible] spikes in the events for COVID testing, we have continued to see the strength in our core businesses as we execute our strategy to expand the footprint…

Thanks, Ming. We continue to fire on all cylinders as we have made great progress with our core business, our new Helio Liver liquid biopsy test, integrating the CSI acquisition, launching the O&M (ph) collaboration, and continual response to the COVID-19 pandemic. I will address each of these in detail, but would first like to comment on the overall performance of the business. We recorded $228 million in revenue the third quarter, an increase of 124% year-over-year. While a bulk of this was driven by COVID-19 testing, our core business grew to over $40 million, an increase of approximately 300% year-over-year. As we have discussed over the course of the year, we have continued to diversify the business outside of pediatric rare disease, and in this quarter, we were able to continue that trend in a big way, with the addition of many new oncology services. As we mentioned on the last call, [Indiscernible] have made a strategic investment in Helios health and have secured exclusive rights to commercialize lab-developed tests in the U.S. and Canada. The first test we announced is a novel liquid biopsy tests for hepatocellular carcinoma, HCC, called Helio liver. HCC it is one of the fastest-growing and deadliest cancers in the U.S. and early detection is critical to successful outcome, especially among high-risk population. In the U.S., more than 100 million people have non-alcoholic fatty liver disease, which is a major driver of liver cancer. Helio liver leverages next-generation sequencing technology to test 28 gene from 77 CPG methylation sites and ASP, ASPO3 and DCP. For over a decade, there's been little to no improvement in a way HCC is detected. Today, the standard of care is ultrasound, which is a relatively ineffective method of detection, with some quoting sensitivity in the 40% range. Ultrasound…

Thanks, Brandon. Revenue in the third quarter totaled $228 million, an increase of a 124%, compared to the third quarter of 2020, well exceeding our guidance of a $125 million to a $150 million. Billable tests in the quarter totaled almost $2.2 million, more than twice the volume of Q3 last year. Breaking down the revenue a bit further, roughly $180 million came from COVID PCR testing, which exceeded our guidance by approximately $100 million and grew a 105% year-over-year, while roughly $40 million came from our core business, which exceeded our guidance of $32 million and grew approximately 300% year-over-year. Now, as a reminder, our core revenue includes our NGS business, contribution from our Chinese JV, and now contribution from CSI. It also includes contribution from our CDC COVID NGS testing agreement, which we saw a meaningful uptick in activity this quarter due to increasing COVID positivity rates, have met the Delta variant spread. We recognize that COVID NGS testing volume from the CDC can vary dramatically depending on COVID, positivity rates, so if we exclude the impact we saw from the CDC in the quarter, our Q3 core revenue still grew by more than 160% year-over-year compared to Q3 of 2020. While demand for COVID testing remains extremely volatile, we remain well-positioned to capture this demand if and when it fluctuate higher, which we saw in the third quarter, a reversal relative to the slowdown we saw in the second quarter. We have continued to take a conservative stance on any expected revenue from COVID testing, given the inherent challenges and predicting COVID spikes or the emergence of other variance, we remain focused on executing on our post COVID growth opportunities, which include expanding the reach of CSI capabilities, working with Helio on our joint commercialization opportunities, growing…

Thank you. [Operator instructions] We'll pause for just a moment to allow everyone an opportunity to signal for questions. Our first question comes from Kevin DeGeeter with Oppenheimer.

Hey guys, thanks for taking my questions. Congrats on a really nice quarter here. A few things, I think Ming highlighted in his prepared comments progress on commercial reimbursement across the portfolio. I guess maybe 2 points on that. Can you quantify the portion of revenue that came from third-party reimbursement and more generally, how do you measure going through the next couple of quarters, continued strength in gaining expanded reimbursement? Is it being able to disclose specific coverage, or a network decision with national payers, is it lives covered, is it percentage of revenue? Just kind of what's the best way to measure improvement on that metric?

Yeah. Thank you, Kevin. I think that in general, our insurance, in terms of life courage, we have about 160 million lives covered under our insurance contracts. But in terms of revenue, in terms -- most were COVID revenue as we [Indiscernible] reimbursement. We also have the 9-year assurance contracts that we should be the -- our relationship with the Biopharma companies. So Paul, you can take a little more to add to cover for what is Kevin 's questions.

Hey, Ming, is Brandon --

Brandon, just to clarify the question, I'm referring to, non-profit.

Right. So the synergies between a Fulgent and CSI, in terms of levering the contracts, really hasn't begun to be realized, meaning, we've been focused on integrating CSI and not cross-selling traditional Fulgent tests with CSI Salesforce and contracts. So, long story short, those efficiencies have not been recognized yet. So the insurance billing we would see to-date would be the traditional CSI business flow [Indiscernible] fair cytogenetics, those products and services. In terms of -- on a go-forward basis, we continue to put effort into becoming more in network. I think we're really happy to be able to sit here and say today that we have 160 million covered lives, but it's a never-ending feet. We continue to go after these smaller regional contracts. Some of the Blue Cross Blue Shield contracts, we don't have yet, so we do have resources working on that on a daily basis to continue to improve and increase the number of covered lives we have.

With regards to sales force expansion for CSI and the oncology franchise, I think your comments suggest somewhere around 15 reps. By the end of the year. At least with the current portfolio. How do you think about appropriate sizing for clinical oncology sales force over say an 18 months to 24 months horizon?

Much bigger than that, right? What we're doing, Kevin, from a go-to-market perspective, is looking at those states where we're particularly strong with managed care and we think that's a good place to start in terms of increasing our headcount. As we mentioned, historically, CSI has been a wonderful business. They've run that business very well for a long time, but it's been a bit focused in Southeast region. Our first objective is to take that Laboratory National, expand outside the Southeast region. We believe we have the managed care contracts to do that and we believe in certain states we're particularly strong in managed care, so that's where we're placing our headcount. I think over time, that number must be bigger. It is a massive market with a tone of call point. We are differentiating a little bit as it relates to oncologists versus pathologists, and we may have some sub-specialty salespeople for oncology, but I think it's a number that's going to continue to grow, especially as we land additional managed care contracts in those states. I think we will be reporting likely each quarter, have this head count expand. But I could see in 2020 that number being significantly more than 15 and that's -- I'm specifically talking about the CSI sales force, not the Helio Salesforce, which would be a different call point.

Understood. And then I'm just with regard -- got one more and then I'll get back in the queue with regard to balance sheet and all with your guidance so close to a billion dollars on the balance sheet by the end of the year, yes, an equivalent to 40% plus of current market cap. How do you think about buybacks or just balance sheet management here? Just kind of given the current balance sheet profile relative to the current stock price?

Thank you for that question, Kevin. Buyback and other options are certainly things that we can consider. But our primary focus is investing in this business and executing on our post - COVID M&A strategy. If you take a look at our core revenues, the amount of core revenues that we threw up in 2019 was $32 million. The amount of core revenues that we had in 2020 was $36 million. The amount of core revenues that we had in a single quarter now is $40 million. Even if you stripped out the NGS from the CDC, because it's hard to predict which way COVID it's going to go, We still had accelerated core revenues in a massive way, and this was possible because of our expanded operational capabilities, our quality, our reputation, our quality of people, and their more senior people that are gravitating towards Fulgent, as well as progress in our reimbursement. If you take a look at our strategy, particularly for M&A, what we're doing is we're using the capital, being very conscious about which assets and which companies to evaluate, and we're doing both, so for example, CSI has bolstered and strengthened traditional capabilities for us and the cancer market being able to provide end-to-end solution. And then for Helio, an investment such as in that area, was an evolving newer markets were liquid biopsy. We also made an investment in China now taking over controlling interest, which will expand our footprint on an international basis. So if you take a look at the approach that we're taking, we're using the massive amount of capital that we continue to write, generate additional cash web. And we're deploying that from an M&A perspective. And we're bolstering the traditional markets as well as looking forward all utilizing our technology and our operational platform. So the long and short of it is, buybacks are certainly an option, but it's our intention to deploy this capital externally as well as investing aggressively within our internal structure.

Thanks for taking our questions.

And there are no further questions at this time. I will now turn the call back to Ming Hsieh for closing remarks.

Again, thank you for joining the conference. We are very excited for the opportunity we're facing, and that definitely we have the capital and technology, and we'll be the major player in this very exciting, dynamic [Indiscernible] to the market. So thank you very much for joining the call and looking forward to update you in the next quarter. Thank you.

And thank you for joining us. This concludes today's call. You may now disconnect.