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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-37894

FULGENT GENETICS, INC.

(Exact name of registrant as specified in its charter)


Delaware	81-2621304
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

4399 Santa Anita Avenue El Monte, CA	91731
(Address of principal executive offices)	(Zip Code)

(626) 350-0537

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.0001 per share	FLGT	The Nasdaq Stock Market (Nasdaq Global Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 27, 2026, there were 28,400,623 outstanding shares of the registrant’s common stock.

Table of Contents


	Page
PART I—FINANCIAL INFORMATION	1
Item 1. Financial Statements (Unaudited)	1
Condensed Consolidated Balance Sheets	1
Condensed Consolidated Statements of Operations	2
Condensed Consolidated Statements of Comprehensive Loss	3
Condensed Consolidated Statements of Stockholders’ Equity	4
Condensed Consolidated Statements of Cash Flows	6
Notes to the Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3. Quantitative and Qualitative Disclosures About Market Risk	38
Item 4. Controls and Procedures	38
PART II—OTHER INFORMATION	39
Item 1. Legal Proceedings	39
Item 1A. Risk Factors	39
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 5. Other Information	39
Item 6. Exhibits	40
Exhibit Index	41
Signatures	42

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

FULGENT GENETICS, INC.

Condensed Consolidated Balance Sheets

(in thousands, except par value data)


	March 31, 2026			December 31, 2025
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	23,399		$	50,193
Marketable securities		252,903			285,884
Trade accounts receivable, net of allowance for credit losses of $21,420 as of March 31, 2026, and $21,411 as of December 31, 2025		69,277			84,762
Prepaid income taxes		109,165			107,099
Other current assets		24,298			22,552
Total current assets		479,042			550,490
Marketable securities, long-term		328,287			369,269
Fixed assets, net		116,344			112,549
In-process research & development		68,490			68,490
Other intangible assets, net		85,499			64,791
Goodwill		53,731			25,080
Other long-term assets		24,976			22,856
Total assets	$	1,156,369		$	1,213,525
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	21,125		$	18,654
Accrued liabilities		34,901			34,057
Customer deposit		30,619			28,145
Contract liabilities		3,007			3,635
Notes payable, current		482			476
Total current liabilities		90,134			84,967
Deferred tax liabilities		6,982			6,936
Unrecognized tax benefits		5,727			7,283
Other long-term liabilities		9,372			7,624
Total liabilities		112,215			106,810
Commitments and Contingencies (Note 8)
Stockholders’ equity
Common stock, $0.0001 par value per share, 50,000 shares authorized, 34,870 shares issued and 28,851 shares outstanding as of March 31, 2026, and 34,501 shares issued and 31,081 shares outstanding as of December 31, 2025		4			3
Preferred stock, $0.0001 par value per share, 1,000 shares authorized, no shares issued or outstanding as of March 31, 2026, and December 31, 2025		—			—
Additional paid-in capital		540,141			574,520
Accumulated other comprehensive income		4,536			7,512
Retained earnings		505,128			529,954
Total Fulgent stockholders’ equity		1,049,809			1,111,989
Noncontrolling interest		(5,655	)		(5,274	)
Total stockholders’ equity		1,044,154			1,106,715
Total liabilities and stockholders’ equity	$	1,156,369		$	1,213,525

The accompanying notes are an integral part of these condensed consolidated financial statements.

FULGENT GENETICS, INC.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)


	Three Months Ended March 31,
	2026			2025
Revenue	$	71,138		$	73,463
Cost of revenue		49,648			45,117
Gross profit		21,490			28,346
Operating expenses
Research and development		14,176			12,395
Selling and marketing		12,221			8,465
General and administrative		27,684			25,291
Amortization of intangible assets		2,031			1,990
Total operating expenses		56,112			48,141
Operating loss		(34,622	)		(19,795	)
Other income (expenses)
Interest income		8,651			8,018
Interest expense		(17	)		(14	)
Other income, net		10			68
Total other income, net		8,644			8,072
Loss before income taxes		(25,978	)		(11,723	)
(Benefit from) provision for income taxes		(704	)		176
Net loss from consolidated operations		(25,274	)		(11,899	)
Net loss attributable to noncontrolling interests		448			369
Net loss attributable to Fulgent	$	(24,826	)	$	(11,530	)

Net loss per common share attributable to Fulgent
Basic	$	(0.80	)	$	(0.37	)
Diluted	$	(0.80	)	$	(0.37	)
Weighted-average common shares:
Basic		30,881			30,832
Diluted		30,881			30,832

The accompanying notes are an integral part of these condensed consolidated financial statements.

FULGENT GENETICS, INC.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2026			2025
Net loss from consolidated operations	$	(25,274	)	$	(11,899	)
Other comprehensive income (loss):
Foreign currency translation income		240			109
Net (loss) gain on available-for-sale debt securities, net of tax		(3,149	)		4,624
Net comprehensive loss from consolidated operations		(28,183	)		(7,166	)
Net loss attributable to noncontrolling interest		448			369
Foreign currency translation income attributable to noncontrolling interest		(67	)		(30	)
Comprehensive loss attributable to noncontrolling interest		381			339
Comprehensive loss attributable to Fulgent	$	(27,802	)	$	(6,827	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

FULGENT GENETICS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands)

(unaudited)


	Fulgent Stockholders’ Equity
	Shares (1)			Amount		Additional Paid-In Capital			Accumulated Other Comprehensive (Loss) Income			Retained Earnings			Fulgent Stockholders’ Equity			Noncontrolling Interest			Total Equity
Balance at December 31, 2025		31,081		$	3	$	574,520		$	7,512		$	529,954		$	1,111,989		$	(5,274	)	$	1,106,715
Equity-based compensation		—			—		9,890			—			—			9,890			—			9,890
Exercise of common stock options		24			—		9			—			—			9			—			9
Restricted stock awards		540			1		—			—			—			1			—			1
Common stock withholding for employee tax obligations		(195	)		—		(4,200	)		—			—			(4,200	)		—			(4,200	)
Repurchase of common stock		(2,599	)		—		(40,078	)		—			—			(40,078	)		—			(40,078	)
Other comprehensive (loss) income, net		—			—		—			(2,976	)		—			(2,976	)		67			(2,909	)
Net loss		—			—		—			—			(24,826	)		(24,826	)		(448	)		(25,274	)
Balance at March 31, 2026		28,851		$	4	$	540,141		$	4,536		$	505,128		$	1,049,809		$	(5,655	)	$	1,044,154

(1) The Company agreed to issue up to 292,682 shares of the Company’s common stock in the acquisition of ANP Technologies, Inc., or ANP, upon achieving certain cash receipts. $5.7 million represented the fair value of the shares on the ANP acquisition date (as defined below). As of March 31, 2026, and December 31, 2025, no common stock has been issued as the milestones have not been met. See details in Note 15. Business Combinations.

The accompanying notes are an integral part of these condensed consolidated financial statements.

FULGENT GENETICS, INC.

Condensed Consolidated Statements of Stockholders’ Equity

(in thousands)

(unaudited)


	Fulgent Stockholders’ Equity
	Shares			Amount		Additional Paid-In Capital			Accumulated Other Comprehensive Income (Loss)			Retained Earnings			Fulgent Stockholders’ Equity			Noncontrolling Interest			Total Equity
Balance at December 31, 2024		30,841		$	3	$	543,126		$	(368	)	$	590,467		$	1,133,228		$	(4,069	)	$	1,129,159
Equity-based compensation		—			—		10,550			—			—			10,550			—			10,550
Restricted stock awards		360			—		—			—			—			—			—			—
Common stock withholding for employee tax obligations		(111	)		—		(1,887	)		—			—			(1,887	)		—			(1,887	)
Repurchase of common stock		(469	)		—		(7,886	)		—			—			(7,886	)		—			(7,886	)
Other comprehensive income, net		—			—		—			4,703			—			4,703			30			4,733
Net loss		—			—		—			—			(11,530	)		(11,530	)		(369	)		(11,899	)
Balance at March 31, 2025		30,621		$	3	$	543,903		$	4,335		$	578,937		$	1,127,178		$	(4,408	)	$	1,122,770

The accompanying notes are an integral part of these condensed consolidated financial statements.

FULGENT GENETICS, INC.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)


	Three Months Ended March 31,
	2026			2025
Cash flow from operating activities:
Net loss from consolidated operations	$	(25,274	)	$	(11,899	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Equity-based compensation		9,890			10,550
Depreciation and amortization		6,000			5,919
Adjustment for credit losses		1,189			2,075
Noncash lease expense		352			350
Gain on disposal of fixed asset		(9	)		(2	)
Amortization of premium of marketable securities		(890	)		(1,658	)
Deferred taxes		(1,120	)		(133	)
Unrecognized tax benefits		199			137
Other		1			21
Changes in operating assets and liabilities:
Trade accounts receivable		16,431			(4,524	)
Income tax		(1,394	)		1,761
Other current and long-term assets		2,791			804
Accounts payable		(408	)		(658	)
Contract liabilities		(627	)		582
Customer deposits		2,470			83
Accrued liabilities and other liabilities		(2,123	)		(7,485	)
Operating lease liabilities		(381	)		(354	)
Net cash provided by (used in) operating activities		7,097			(4,431	)
Cash flow from investing activities:
Maturities of marketable securities		81,711			32,445
Proceeds from sale of fixed assets		8			2
Purchase of marketable securities		(10,011	)		—
Purchases of fixed assets		(5,202	)		(4,718	)
Acquisition of businesses, net of cash		(55,567	)		—
Net cash provided by investing activities		10,939			27,729
Cash flow from financing activities:
Repurchase of common stock		(40,078	)		(8,679	)
Common stock withholding for employee tax obligations		(4,200	)		(1,887	)
Repayment of notes payable		(476	)		(470	)
Principal paid for finance lease		(88	)		(136	)
Proceeds from exercise of stock options		9			—
Net cash used in financing activities		(44,833	)		(11,172	)
Effect of exchange rate changes on cash and cash equivalents		3			11
Net (decrease) increase in cash, cash equivalents, and restricted cash		(26,794	)		12,137
Cash, cash equivalents, and restricted cash at beginning of period		50,328			55,279
Cash, cash equivalents, and restricted cash at end of period	$	23,534		$	67,416
Supplemental disclosures of cash flow information:
Income taxes paid, net of refunds received	$	(551	)	$	(1,633	)
Interest paid	$	44		$	61
Supplemental disclosures of non-cash investing and financing activities:
Purchases of fixed assets in accounts payable	$	2,606		$	2,322
Acquisition of business in accrued liabilities	$	141		$	—
Operating lease right-of-use assets obtained in exchange for lease liabilities	$	210		$	—

The accompanying notes are an integral part of these condensed consolidated financial statements.

FULGENT GENETICS, INC.

Notes to the Condensed Consolidated Financial Statements

(unaudited)

Note 1. Overview and Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP, and presented in U.S. dollars, or USD, the reporting currency of the Company. These financial statements include the assets, liabilities, revenues and expenses of all subsidiaries and entities in which the Company has a controlling financial interest or is deemed to be the primary beneficiary. In determining whether the Company is the primary beneficiary of an entity, the Company applies a qualitative approach that determines whether it has both (i) the power to direct the economically significant activities of the entity and (ii) the obligation to absorb losses of, or the right to receive benefits from, the entity that could potentially be significant to that entity. The Company uses the equity method to account for its investments in entities that it does not control, but in which it has the ability to exercise significant influence over operating and financial policies. All intercompany accounts and transactions are eliminated from the accompanying condensed consolidated financial statements.

Nature of the Business

Fulgent Genetics, Inc., together with its subsidiaries and affiliated professional corporations, or PCs (collectively referred to as the Company, unless otherwise noted or the context requires otherwise), is a technology-based company with a well-established laboratory services business and a therapeutic development business. Its laboratory services business includes technical laboratory and testing services and professional interpretation of laboratory results by licensed physicians. Its therapeutic development business is focused on developing product candidates for treating a broad range of cancers using a novel nanoencapsulation and targeted therapy platform designed to improve the therapeutic window and pharmacokinetic profile of new and existing cancer drugs. The Company aims to transform from a genomic diagnostic business into a fully integrated precision medicine company.

Unaudited Interim Financial Information

The accompanying unaudited interim condensed consolidated financial statements have been prepared on the same basis as the Company’s audited consolidated financial statements as of and for the fiscal year ended December 31, 2025, which are included in the Company’s annual report on Form 10-K filed with the Securities and Exchange Commission, or SEC, on February 27, 2026, or the 2025 Annual Report, and, in the opinion of management, include all adjustments, which are normal and recurring in nature, necessary for a fair presentation of the Company’s financial position and results of operations. Operating results for interim periods are not necessarily indicative of the results that may be expected for a full fiscal year or any other period. The accompanying Condensed Consolidated Balance Sheet as of December 31, 2025, has been derived from the Company’s audited consolidated financial statements at that date but does not include all of the disclosures required by U.S. GAAP. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the Company’s audited consolidated financial statements included in the 2025 Annual Report, including the notes thereto.

Note 2. Summary of Significant Accounting Policies

See Note 2, Summary of Significant Accounting Policies, to the Company’s Consolidated Financial Statements included in the 2025 Annual Report.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting periods. These estimates, judgments and assumptions are based on historical data and experience available at the date of the accompanying condensed consolidated financial statements, as well as various other factors management believes to be reasonable under the circumstances. The Company’s estimates and assumptions may evolve as conditions change. Actual results could differ significantly from these estimates.

On an on-going basis, management evaluates its estimates, primarily those related to: (i) revenue recognition criteria, (ii) accounts receivable and allowances for credit losses, (iii) the useful lives of fixed assets and intangible assets, (iv) estimates of tax liabilities, (v) valuation of goodwill and indefinite-lived intangible assets at time of acquisition and on a recurring basis, and (vi) valuation of investments.

Cash, Cash Equivalents, and Restricted Cash Shown in the Condensed Consolidated Statements of Cash Flows

The following table provides a reconciliation of cash, cash equivalents, and restricted cash in the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows:


	Three Months Ended March 31,
	2026		2025
	(in thousands)
Cash and cash equivalents	$	23,399	$	67,281
Restricted cash included in Other long-term assets		135		135
Total cash, cash equivalents, and restricted cash	$	23,534	$	67,416

Trade Accounts Receivable and Allowance for Credit Losses

Trade accounts receivable are stated at the amount the Company expects to collect. The Company maintains an allowance for credit losses for expected uncollectible trade accounts receivable, which is recorded as an offset to trade accounts receivable, and changes in allowance for credit losses are classified as a general and administrative expense in the accompanying Condensed Consolidated Statements of Operations. The Company assesses collectability by reviewing trade accounts receivable on a collective basis where similar risk characteristics exist and on an individual basis when it identifies specific customers that have deterioration in credit quality such that they may no longer share similar risk characteristics with the other receivables. In determining the amount of the allowance for credit losses, the Company uses a loss rate model or probability-of-default and loss given default model. Following the loss rate method, expected credit losses are determined based on an estimated historical loss rate. The probability of default method allows the ability to define a point of default and measure credit losses for receivables that have reached the point of default for purposes of calculating the allowance for credit losses. Loss given default represents the likelihood that a receivable that has reached the point of default will not be collected in full. The Company updates its loss rate and factors quarterly to incorporate the most recent historical data and adjusts the quantitative portion of the reserve through its qualitative reserve overlay. The Company looks at qualitative factors such as current internal and external conditions as of the balance sheet date in determining expected credit losses.

A roll-forward of the activity in the Company’s allowance for credit losses for the three months ended March 31, 2026, dollars in thousands, is as follows:


Allowance for credit losses at beginning of year	$	21,411
Current period provision		1,189
Write-downs		(1,573	)
Recoveries of amounts previously charged off		393
Allowance for credit losses as of March 31, 2026	$	21,420

Business Combinations

The Company uses the acquisition method of accounting and allocates the fair value of purchase consideration to the assets acquired and liabilities assumed from an acquiree based on their respective fair values as of the acquisition date. The excess of the fair value of purchase consideration over the fair value of these assets acquired and liabilities assumed is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets. Critical estimates in valuing intangible assets include, but are not limited to, expected future cash flows, which includes consideration of future growth and margins, future changes in technology, expected cost and time to develop in-process research and development, brand awareness and discount rates. Fair value estimates are based on the assumptions that management believes a market participant would use in pricing the asset or liability

Finite-Lived Intangible Assets

Intangible assets, unless determined to be indefinite-lived, are amortized over their estimated useful lives. The Company amortizes intangible assets with definite lives on a straight-line basis generally over periods ranging from 3 to 18 years. See Note 17, Goodwill and Intangible Assets, for details of intangible assets.

Impairment of Long-Lived Assets

The Company evaluates the carrying amount of its long-lived assets whenever events or changes in circumstances indicate that the assets may not be recoverable. An impairment loss would be recognized when estimated future cash flows expected to result from the use of an asset and its eventual disposition are less than the carrying amount of the asset.

Goodwill and Indefinite-Lived Intangibles

In-process research & development, or IPR&D, costs are considered to be indefinite-lived until the completion or abandonment of the associated research and development efforts. If and when development is complete, the associated assets would be deemed finite-lived and would then be amortized based on their respective estimated useful lives at that point in time.

The Company assesses goodwill and indefinite-lived intangibles for impairment on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. The Company may choose to bypass a qualitative assessment of impairment for any reporting unit and proceed directly to performing a quantitative assessment. An impairment loss would be recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value.

If a quantitative assessment is deemed necessary, the quantitative assessment includes estimating the fair value of each reporting unit and comparing it to its carrying value. The Company estimates the fair value of reporting units using both income-based and market-based valuation methods and typically engages a third-party appraisal firm to assist with the valuation. If the estimated fair value of a reporting unit exceeds its carrying value, the goodwill is not impaired, and no further review is required.

The income-based fair value methodology is based on a reporting unit’s forecasted future cash flows that are discounted to the present value using the reporting unit’s weighted-average cost of capital. The income-based approach incorporates management’s assumptions and judgments regarding economic conditions in the markets in which a company operates and conditions in the capital markets, many of which are outside of management’s control. The market-based fair value methodology includes (i) the guideline public company valuation method, which analyzes the valuation multiples of comparable public companies, and (ii) the merger and acquisition method, which compares the market values of similar businesses, to estimate the value of the reporting units. Under the market-based approach, judgment is required in evaluating market multiples and recent transactions.

Fair Value of Financial Instruments

The Company’s financial instruments consist principally of cash and cash equivalents, marketable securities, trade accounts receivable, restricted cash, a preferred stock investment, accounts payable, and accrued liabilities. The carrying amounts of certain of these financial instruments, including cash and cash equivalents, accounts receivable, accounts payable, and accrued liabilities approximate fair value due to their short maturities. The fair value of marketable securities and the preferred stock investment is disclosed in Note 4, Fair Value Measurements, to the accompanying condensed consolidated financial statements.

Concentrations of Credit Risk, Customers, and Suppliers

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents, trade accounts receivable, and marketable securities. As of March 31, 2026, substantially all of the Company’s cash and cash equivalents were deposited in accounts at financial institutions, and amounts may exceed federally insured limits. Management believes that the Company is not exposed to significant credit risk due to the financial strength of the depository institutions in which its cash and cash equivalents are held.

In certain periods, a small number of customers or a single laboratory customer have accounted for a significant portion of the Company’s revenue. For the laboratory services segment, when customers who, to our knowledge, are under common control or otherwise affiliated with each other are aggregated, one of our laboratory customers contributed $10.4 million, or 15%, of total revenue in the three months ended March 31, 2026, and $17.6 million, or 24%, of the Company’s revenue in the three months ended March 31, 2025. The same laboratory customer was not a significant concentration for accounts receivable, net, as of March 31, 2026, but comprised 13% of total accounts receivable, net, as of December 31, 2025. Revenue from this same laboratory customer declined when compared to the prior year period, however it continued to represent a significant portion of the Company's revenue for the three months ended March 31, 2026. For this laboratory customer, and for our customers generally, tests are typically purchased on a test-by-test basis and not pursuant to any long-term purchasing arrangements. In the therapeutic development segment, revenue is an immaterial portion of the Company’s total revenue as it does not yet have any commercialized or approved product candidates.

The Company relies on a limited number of suppliers for certain laboratory substances used in the chemical reactions incorporated into its processes, referred to as reagents, as well as for the sequencers and various other equipment and materials it uses in its laboratory operations. In particular, the Company relies on a sole supplier for the next generation sequencers and associated reagents it uses to perform its genetic tests and as the sole provider of maintenance and repair services for these sequencers. The Company’s laboratory operations would be interrupted if it encountered delays or difficulties securing these reagents, sequencers, other equipment or materials or maintenance and repair services, which could occur for a variety of reasons, including if the Company needs a replacement or temporary substitute for any of its limited or sole suppliers and is not able to locate and make arrangements for an acceptable replacement or temporary substitute. The Company’s development efforts could also be delayed or interrupted if it is unable to procure items needed for its therapeutic development activities. The Company believes there is currently a limited number of manufacturers that are capable of supplying and servicing some of the equipment and other materials necessary for its laboratory operations, including sequencers and various associated reagents.

Reportable Segments and Geographic Information

Reportable segments are identified as components of an enterprise for which separate discrete financial information is available for evaluation by the Chief Operating Decision-Maker, or CODM, in making decisions regarding resource allocation and assessing performance. The Company’s CODM is its Chief Executive Officer. The Company has two reportable segments, a laboratory services business and a therapeutic development business. For further financial information about these segments, including information for each of the periods presented regarding revenue, operating income (loss), and other important information, see Note 7, Reportable Segment and Geographic Information.

Foreign Currency Translation and Foreign Currency Transactions

The Company translates the assets and liabilities of its non-USD functional currency subsidiaries into USD using exchange rates in effect at the end of each period. Expenses for these subsidiaries are translated using rates that approximate those in effect during the period. These unrealized gains and losses are recognized in accumulated other comprehensive income in the equity section of the accompanying Condensed Consolidated Balance Sheets, and do not impact net income.

The Company and its subsidiaries that use the USD as their functional currency remeasure monetary assets and liabilities at exchange rates in effect at the end of each period. The carrying value of these monetary assets and liabilities will change with exchange rate fluctuations resulting in a foreign currency transaction gain or loss which is recognized in other income, net in the Condensed Consolidated Statements of Operations. Reagents and supplies, property, and other nonmonetary assets and liabilities are remeasured when the transaction is initially recognized using the historical rate that was in effect when the asset was acquired or liability was incurred. The carrying amounts do not change as a result of exchange rate fluctuations and no foreign currency transaction gain or loss is recognized. Gains and losses from foreign currency exchange were not significant for the three months ended March 31, 2026, and 2025.

Income Taxes

The effective tax rate used for interim periods is the estimated annual effective consolidated tax rate, based on the current estimate of full year results, except that taxes related to specific events, if any, are recorded in the interim period in which they occur. The annual effective tax rate is based upon several significant estimates and judgments, including the estimated annual pre-tax income (loss) of the Company in each tax jurisdiction in which it operates, and the development of tax planning strategies during the year. In addition, the Company’s tax expense can be impacted by changes in tax rates or laws and other factors that cannot be predicted with certainty. As such, there can be significant volatility in interim tax provisions.

Comprehensive (Loss) Income

Comprehensive (loss) income is comprised of net (loss) income and other comprehensive (loss) income. Other comprehensive (loss) income consists of net unrealized gain or loss on available-for-sale debt securities, net of tax, and foreign currency translation adjustments from the Company’s subsidiaries not using the USD as their functional currency. The tax expense of foreign currency translation income (loss) was zero for each of the three months ended March 31, 2026, and 2025.

Reclassifications from other comprehensive (loss) income to net loss, were zero in each of the three months ended March 31, 2026, and 2025. The tax effects related to net unrealized gain or loss on available-for-sale debt securities was zero in each of the three months ended March 31, 2026, and 2025, due to the valuation allowance in the current period that precludes the Company from recognizing the deferred tax benefit.

Disaggregation of Revenue

The Company classifies its customers into three payor types: (i) Institutional, including hospitals, medical institutions, other laboratories, governmental bodies, and large corporations, (ii) Insurance, or (iii) Patients who pay directly, as the Company believes this best depicts how the nature, amount, timing, and uncertainty of its revenue and cash flows are affected by economic factors. The following table summarizes revenue from contracts with customers by payor type for the three months ended March 31, 2026, and 2025:


	Three Months Ended March 31,
	2026		2025
	(in thousands)
Revenue by payor
Institutional	$	40,933	$	41,324
Insurance		27,379		30,744
Patients		2,826		1,395
Total revenue	$	71,138	$	73,463

The Company estimates variable consideration using the expected value method. Any changes in variable consideration estimates that affect transactions are accounted for on a cumulative catch-up basis. Variable consideration adjustments in the three months ended March 31, 2026, and 2025 were not significant.

Contract Balances

Receivables from contracts with customers

Receivables from contracts with customers are included within trade accounts receivable on the Condensed Consolidated Balance Sheets. Receivables from Insurance and Institutional customers represented 52% and 48%, respectively, as of March 31, 2026, and each represented 50% as of December 31, 2025.

Contract assets and liabilities

Contract liabilities are recorded when the Company receives payment prior to completing its obligation to transfer goods or services to a customer. Contract liabilities are included in the Condensed Consolidated Balance Sheets. Revenues of $0.7 million and $0.1 million were recognized for the three months ended March 31, 2026, and 2025, respectively, related to contract liabilities at the beginning of the respective periods. As of March 31, 2026, and December 31, 2025, the Company has no contract assets from contracts with customers associated with contract execution and certain costs to fulfill a contract.

Prior Period Reclassifications

Certain amounts reported in the prior period have been reclassified to conform with the current period presentation. In the Condensed Consolidated Statement of Cash Flows, the Company has presented income taxes paid, net of refunds received, due to the prior adoption of ASU 2023-09, Income Taxes (Topic 740): Improvement to Income Tax Disclosures.

Recent Accounting Pronouncements

The Company evaluates all Accounting Standards Updates, or ASUs, issued by the Financial Accounting Standards Board, or FASB, for consideration of their applicability. ASUs not included in the Company’s disclosures were assessed and determined to be either not applicable or are not expected to have a material impact on the Company’s condensed consolidated financial statements.

Adopted

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This update provides all entities with a practical expedient related to the estimation of expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC 606. Amendments in this update are effective for annual periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company adopted this ASU in the first quarter of 2026, and the impact is not material for the consolidated financial statements and related disclosures.

Issued

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. This update requires disclosure in the notes to financial statements of specified information about certain costs and expenses. Amendments in this update are effective for annual periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impacts of this amendment on its consolidated financial statements and related disclosure.

In September 2025, the FASB issued ASU 2025-06, Intangible—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This update simplifies the capitalization guidance by removing all references to software development project stages, so that the guidance is neutral to different software development methods. Amendments in this update are effective for annual periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impacts of this amendment on its financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting (Topic 270): Narrow-Scope Improvements. This update clarifies the applicability of interim reporting guidance, provides a comprehensive list of required interim disclosures, and establishes a disclosure principle that requires disclosure of material events that occurred after the end of the last annual reporting period. Amendments in this update are effective for interim reporting periods within annual periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of this amendment on its financial statements and related disclosures.

In December 2025, the FASB issued ASU 2025-12, Codification Improvements. This update makes targeted amendments to various topics within the Accounting Standards Codification intended to clarify, correct errors, or make minor improvements to existing guidance. Amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of this amendment on its financial statements and related disclosures.

The Company does not expect that any other recently issued accounting guidance will have a significant effect on its consolidated financial statements.

Note 3. Equity and Debt Securities

The Company’s equity and debt securities consisted of the following:


	March 31, 2026
	Amortized Cost Basis			Unrealized Gains		Unrealized Losses			Aggregate Fair Value
	(in thousands)
Equity securities
Long-term
Preferred stock of privately-held companies	$	15,001		$	—	$	—		$	15,001
Total equity securities		15,001			—		—			15,001
Available-for-sale debt securities
Short-term
U.S. government debt securities		178,697			539		—			179,236
Corporate debt securities		40,744			98		(7	)		40,835
U.S. agency debt securities		31,913			47		(3	)		31,957
Yankee debt securities		500			—		(1	)		499
Municipal bonds		375			1		—			376
Money market accounts		1,493			—		—			1,493
Less: Cash equivalents		(1,493	)		—		—			(1,493	)
Total debt securities due within 1 year		252,229			685		(11	)		252,903
After 1 year through 5 years
U.S. government debt securities		256,681			1,206		(758	)		257,129
U.S. agency debt securities		70,587			37		(384	)		70,240
Municipal bonds		920			1		(3	)		918
Total debt securities due after 1 year through 5 years		328,188			1,244		(1,145	)		328,287
Total available-for-sale debt securities		580,417			1,929		(1,156	)		581,190
Total equity and debt securities	$	595,418		$	1,929	$	(1,156	)	$	596,191


	December 31, 2025
	Amortized Cost Basis			Unrealized Gains		Unrealized Losses			Aggregate Fair Value
	(in thousands)
Equity securities
Long-term
Preferred stock of privately-held companies	$	15,001		$	—	$	—		$	15,001
Total equity securities		15,001			—		—			15,001
Available-for-sale debt securities
Short-term
U.S. government debt securities		159,875			748		(1	)		160,622
U.S. agency debt securities		86,786			133		(1	)		86,918
Corporate debt securities		37,333			157		(16	)		37,474
Yankee debt securities		500			—		(5	)		495
Municipal bonds		375			—		—			375
Money market accounts		18,398			—		—			18,398
Less: Cash equivalents		(18,398	)		—		—			(18,398	)
Total debt securities due within 1 year		284,869			1,038		(23	)		285,884
After 1 year through 5 years
U.S. government debt securities		284,857			2,821		(67	)		287,611
U.S. agency debt securities		70,567			123		(51	)		70,639
Corporate debt securities		9,922			85		—			10,007
Municipal bonds		1,015			1		(4	)		1,012
Total debt securities due after 1 year through 5 years		366,361			3,030		(122	)		369,269
Total available-for-sale debt securities		651,230			4,068		(145	)		655,153
Total equity and debt securities	$	666,231		$	4,068	$	(145	)	$	670,154

Gross unrealized losses on the Company’s equity and debt securities were $1.2 million and $0.1 million as of March 31, 2026, and December 31, 2025, respectively. There were no sales of available-for-sale securities or realized gain or loss for the three months ended March 31, 2026. The cost of any marketable securities sold is based on the specific-identification method. The Company did not recognize any credit losses for its marketable available-for-sale debt securities during the three months ended March 31, 2026, and 2025.

Note 4. Fair Value Measurements

The authoritative guidance on fair value measurements establishes a framework with respect to measuring assets and liabilities at fair value on a recurring basis and non-recurring basis. Under the framework, fair value is defined as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, as of the measurement date. The framework also establishes a three-tier hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs market participants would use in valuing the asset or liability and are developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the factors market participants would use in valuing the asset or liability and are developed based on the best information available in the circumstances. The hierarchy consists of the following three levels:


Level 1:	Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date.
Level 2:	Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.
Level 3:	Inputs are unobservable for the asset or liability.

The following tables present information about the Company’s financial assets measured at fair value on a recurring basis, based on the three-tier fair value hierarchy:


	March 31, 2026
	Total		Level 1		Level 2		Level 3
	(in thousands)
Equity securities, debt securities and cash equivalents
U.S. government debt securities	$	436,365	$	—	$	436,365	$	—
U.S. agency debt securities		102,197		—		102,197		—
Corporate debt securities		40,835		—		40,835		—
Preferred stock of privately-held companies		15,001		—		—		15,001
Money market accounts		1,493		1,493		—		—
Municipal bonds		1,294		—		1,294		—
Yankee debt securities		499		—		499		—
Total equity securities, debt securities and cash equivalents	$	597,684	$	1,493	$	581,190	$	15,001


	December 31, 2025
	Total		Level 1		Level 2		Level 3
	(in thousands)
Equity securities, debt securities and cash equivalents
U.S. government debt securities	$	448,233	$	—	$	448,233	$	—
U.S. agency debt securities		157,557		—		157,557		—
Corporate debt securities		47,481		—		47,481		—
Money market accounts		18,398		18,398		—		—
Preferred stock of privately-held companies		15,001		—		—		15,001
Municipal bonds		1,387		—		1,387		—
Yankee debt securities		495		—		495		—
Total equity securities, debt securities and cash equivalents	$	688,552	$	18,398	$	655,153	$	15,001

The Company’s Level 1 assets include money market instruments and are valued based upon observable market prices. Level 2 assets consist of U.S. government and U.S. agency debt securities, municipal bonds, corporate debt securities and Yankee debt securities. Level 2 securities are valued based upon observable inputs that include reported trades, broker/dealer quotes, bids and offers.

As of March 31, 2026, and December 31, 2025, the Company held preferred stock of two privately-held companies, which were included in other long-term assets in the accompanying Condensed Consolidated Balance Sheets, that were measured using unobservable (Level 3) inputs. For the value of the investment in private equity securities, the Company elected to measure such investments at cost minus impairment, as the preferred stock of the privately-held companies did not have a readily determinable fair value. An impairment of $9.9 million was recognized in 2025 related to Helio Genomics, Inc. There was no impairment loss recorded as of March 31, 2026, for the other preferred stock investment.

There were no transfers between fair value measurement levels during the three months ended March 31, 2026, and 2025.

Note 5. Fixed Assets

Major classes of fixed assets consisted of the following:


	Useful Lives	March 31, 2026			December 31, 2025
		(in thousands)
Medical lab equipment	5 months to 13 Years	$	63,086		$	60,691
Building improvements	6 months to 39 Years		35,530			33,198
Building	25 to 39 Years		21,689			21,689
Computer hardware	1 to 5 Years		9,622			8,640
Aircraft	7 Years		6,400			6,400
Computer software	1 to 10 Years		6,308			6,300
Leasehold improvements	Shorter of lease term or estimated useful life		4,387			4,473
Furniture and fixtures	1 to 11 Years		4,425			4,128
Land improvements	5 to 15 Years		938			938
Automobile	3 to 7 Years		592			628
General equipment	5 Years		258			226
Land			17,347			17,347
Assets not yet placed in service			7,071			5,836
Total			177,653			170,494
Less: Accumulated depreciation			(61,309	)		(57,945	)
Fixed assets, net		$	116,344		$	112,549

Depreciation expense on fixed assets totaled $3.9 million and $3.8 million for the three months ended March 31, 2026, and 2025, respectively.

Note 6. Other Significant Balance Sheet Accounts

Other current assets consisted of the following:


	March 31, 2026		December 31, 2025
	(in thousands)
Reagents and supplies		11,286		10,604
Prepaid expenses		5,783		5,100
Marketable securities interest receivable		5,384		5,714
Inventory		770		—
Other receivable		1,075		1,134
Total	$	24,298	$	22,552

Accrued liabilities consisted of the following:


	March 31, 2026		December 31, 2025
	(in thousands)
Accrued legal liabilities	$	14,620	$	14,905
Payroll liabilities		7,294		4,383
Vacation accrual		6,204		5,236
Accrued bonus and commission		2,376		5,224
Operating lease liabilities - short term		1,932		1,462
Other accrued liabilities		2,475		2,847
Total	$	34,901	$	34,057

Accrued legal liabilities as of March 31, 2026 and December 31, 2025, included an accrual of $14.5 million related to a professional liability matter, refer to Note 8, Debt, Commitments and Contingencies, for additional details. Other accrued liabilities also included short-term finance lease liabilities, health insurance liabilities, accrued property taxes, income tax payables, and third-party billing services.

Other long-term liabilities consisted of the following:


	March 31, 2026		December 31, 2025
	(in thousands)
Operating lease liabilities, long term	$	6,008	$	3,781
Notes payable, long term		1,476		1,958
Other long-term liabilities		1,888		1,885
Total	$	9,372	$	7,624

Note 7. Reportable Segments and Geographic Information

The Company has two distinct reportable segments. The laboratory services operating segment offers technical laboratory and testing services and professional interpretation of laboratory results by licensed physicians who specialize in pathology and oncology. The therapeutic development operating segment is a pharmaceutical research and development entity.

The Company’s Chief Executive Officer serves as its CODM. The CODM oversees the Company’s operations and evaluates financial data for its two operating segments separately to make resource allocation decisions. The financial information regularly provided to the CODM includes various performance metrics by reportable segment, such as gross profit, operating income or loss, income or loss before income taxes, net income or loss from consolidated operations, and net income or loss attributable to Fulgent, all presented in accordance with U.S. GAAP. Although multiple financial metrics are provided, the CODM primarily relies on adjusted (non-GAAP) operating income or loss to evaluate segment performance and allocate resources. These adjusted metrics exclude the impact of equity-based compensation expenses, amortization of intangible assets, acquisition-related costs, and acquisition-related severance, if applicable as determined by management. Acquisition-related costs and acquisition-related severance are related to the acquisition of Bako (as defined below), which was closed on March 17, 2026, see Note 15. Business Combinations for additional details. The balance sheet is presented on a consolidated basis, as the CODM does not use asset or liability information, including fixed assets, to assess segment performance. As a result, segment asset and liability details are not disclosed.

The newly acquired entity, Bako, is considered part of the laboratory services segment as this acquisition was strategically undertaken to further strengthen the Company’s laboratory services business by adding new products and services and further expand its national client base, national sales team, and team of expert pathologists. Consequently, Bako’s operations are integrated into the laboratory services segment, with shared resources and collaborative efforts, and the CODM evaluates Bako’s operations as part of the laboratory services segment’s consolidated financial information. Therefore, Bako’s financial results are grouped within the laboratory services segment’s reporting.

There is no inter-segment allocation of interest expense and income taxes. There is no inter-segment revenue and operating income or loss. The Company did not allocate income tax by segment. Information regarding the Company’s operations and assets for its reportable segments as well as geographic information are as follows, all dollars are in thousands:


	Laboratory Services			Therapeutic Development			Total
Three Months Ended March 31, 2026
Revenue	$	71,051		$	87		$	71,138
Less:
Adjusted cost of revenue		48,179			8			48,187
Adjusted research and development		6,461			4,178			10,639
Adjusted selling and marketing		11,576			—			11,576
Adjusted general and administrative		20,052			357			20,409
Total adjusted operating loss	$	(15,217	)	$	(4,456	)	$	(19,673	)


	Laboratory Services			Therapeutic Development			Total
Three Months Ended March 31, 2025
Revenue	$	73,463		$	—		$	73,463
Less:
Adjusted cost of revenue		43,337			—			43,337
Adjusted research and development		4,931			3,990			8,921
Adjusted selling and marketing		7,575			—			7,575
Adjusted general and administrative		20,624			261			20,885
Total adjusted operating loss	$	(3,004	)	$	(4,251	)	$	(7,255	)


	Three Months Ended March 31,
	2026			2025
Reconciliation of “adjusted operating loss” to “loss before income taxes”
Adjusted operating loss	$	(19,673	)

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Fulgent Genetics, Inc. 10-Q