Fulgent Genetics Inc
NASDAQ:FLGT
Earnings Call Analysis
Q4-2023 Analysis
Fulgent Genetics Inc
The latest financial details reflect a company in transition, emphasizing core growth as it navigates away from COVID-19-related revenues. Revenue in the fourth quarter rose modestly to $70 million, compared to $68 million in the previous year's quarter, reflecting a 7% year-over-year growth. Notably, $4 million was from unexpected COVID-19 testing. When excluding this one-time revenue, core business revenue was $66 million, beating the guidance by 2 million and showing a robust 21% growth from the previous year. Looking ahead, the company expects total core revenues to reach about $280 million in 2024, representing another 7% increase year-over-year. Gross margins have improved to 36%, benefiting from efficient insurance collections and the wind down of COVID-19 business, with expectations to reach mid-30% in 2024, and aspirations to hit the 40% target by year's end.
Precision Diagnostics continues to be the standout performer and the highest growth area for the company, as it comprises clinical next-generation sequencing (NGS) revenue, oncology, reproductive services, and more. The division has seen significant organic growth, increasing from $97.3 million in 2022 to $131.1 million in 2023, and it is anticipated to exceed $173 million in 2024. This performance underscores an impressive 31% organic growth, which indicates the successful leverage of the company's technological capabilities. Despite facing divisional headwinds in Anatomic Pathology and BioPharma Services, Precision Diagnostics is forecasted to grow around 30% in 2024.
The company has been active in optimizing its operations and navigating industry pressures. They have responded to normal business challenges, such as contract pricing pressures, with a firm commitment to leveraging contracts across the organization, a strategy that appears to be yielding positive results. The integration of Anatomic Pathology from Informed Diagnostics has faced pricing pressure and lower contract rates but remains an essential contributor to the company's revenue despite a projected decline. BioPharma Services, too, is expected to drop but still plays a critical role in the company’s portfolio, suffering from the scaling back of certain projects.
The firm is vigilant about its spend management and is confident in its foundational technology to support strong long-term margins. A cash burn of approximately $15 million to $17 million is projected for the therapeutics business in the current year. Notwithstanding these expenditures, including significant investment in a new Dallas facility, the company expects to conclude 2024 with a substantial cash position of approximately $800 million. This careful balance is also reflected in the anticipated non-GAAP loss of roughly $1.05 per share for 2024, factoring in the strategic cash outlays and investment in growth.
The company's executives emphasized resilience in potential changes to regulatory oversight. They expressed readiness to adapt to any new FDA requirements for laboratory developed tests (LDTs) if necessary, highlighting robust quality systems and infrastructure that could position them advantageously relative to peers who may not be as prepared for regulatory changes. This flexibility reinforces the company's ability to continue providing essential services regardless of the regulatory path chosen by the FDA. The proactive attitude toward potential future regulatory demands underlines a strategic approach to sustain business continuity and competitive advantage.
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Greetings, and welcome to the Fulgent Genetics Fourth Quarter and Full Year 2023 Conference Call and Webcast. [Operator Instructions]. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host, Melanie Solomon, Investor Relations for Fulgent Genetics. Please go ahead.
Thank you. Good morning, and welcome to the Fulgent Fourth Quarter and Full Year 2023 Financial Results Conference Call. On the call are Ming Hsieh, Chief Executive Officer; Paul Kim, Chief Financial Officer; and Brandon Perthuis, Chief Commercial Officer.
The company's press release discussing the financial results is available on the Investor Relations section of the company's website, www.fulgentgenetics.com. A replay of this call will be available shortly after the call concludes on the Investor Relations section of the company's website.
Management's prepared remarks and answers to your questions on today's call 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 that 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 to listen to management's remarks today with the understanding that actual events, including the company's actual future results, may be materially different in 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 of the risk factors that may cause results to differ from those described in the 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 31, 2022, and subsequently filed reports, which are available on 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 United States or GAAP. Management has presented these non-GAAP financial measures because it believes they may be useful to investors for various reasons, but these measures 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 fourth quarter and full year 2023 for more information, including the description of how the company calculates non-GAAP income or loss, earnings or loss per share and adjusted EBITDA and a reconciliation of these financial measures to income or loss and earnings per share or loss per share, the most directly comparable GAAP financial measures. With that, I'd now like to turn the call over to Ming.
Thank you, Melanie. Good morning, and thank you for joining our call today. I will start with some comments on the fourth quarter and the year ended December 31, 2023. Then Brandon will review our product and go-to-market updates from the fourth quarter, and Paul will conclude with the financials and the 2024 outlook before we take your questions.
We are pleased with our results in the fourth quarter with $70 million of total revenue. Due to our successful collection efforts, we recognized $4 million of revenue on previously built COVID-19 test.
As you will see in our 10-K, we are now reporting our business in 2 segments: one, our laboratory service business, which we will previously refer as our clinical diagnostics business; and second, our therapeutic development business. We have renamed our clinical diagnostic business to better represent the inclusion of technical laboratory services and professional interpretation of laboratory results by licensed physicians. This will now be called laboratory service.
As a reminder, core revenue is the total laboratory service revenue from the company without COVID-19 tests revenue. Fourth quarter core revenue of $66 million was driven by the momentum in precision diagnostics and better-than-expected revenue from Anatomic Pathology and BioPharma Services.
After raising full year guidance twice in 2023, we outperformed the full year by $2 million in the core revenue from the latest rates in guidance with a positive impact on margins and earnings.
Moving on to our Therapeutics Development business, we are continuing to make good progress with Fulgent Pharma. Our novel nanoencapsulation technology includes over 40 issued or active patents and active patent applications and the targeted therapeutic platform designed to improve therapeutic window and pharmacokinetic profile for both new and existing drug -- cancer drugs.
Our lead drug candidate, FID-007 has shown promising results in clinical trials today. For the treatment of numerous cancers include head and neck, ampullary, pancreatic with a manageable safety profile observed in trial performed to date and abstract on preliminary head and neck cancer clinical trial results from our Phase Ib study has been submitted for the 2024 ASCO Annual Meeting, which will be held in the second quarter.
Our Phase II clinical protocol for the second line treatment of head and neck cancer has been accepted by the FDA, and we expect to enroll the first patient early in the second quarter of this year. We are excited about reaching this next milestones for the Pharma and bring FID-007 to more patients in the clinical setting.
In addition, using the same nano-drug delivery platform, we are also advancing our second drug candidate, FID-002, or nanoencapsulated SN-38, very rapidly and expect to file an IND or investigational new drug application by the end of the year. While irinotecan, a prodrug for SN-38 has been approved by the FDA for colon cancer treatment.
Formulations used in its active components SN-38 have not been successfully developed so far primarily due to poor drug solubility and toxicity safety issues. We believe our nano-drug delivery platform has the potential to address these challenges.
On the R&D front, building upon our clinically-proven nanoparticle technology while also developing a next-generation antibody drug conjugate technology platform that could potentially prove even broader killing towards heterogeneous cancer cells than those ADCs with the bystander killing effects. Our ADC platform is not target dependent and that could potentially be applied to many different targeted ADCs, particularly for new targets with low antigen expansion, where existing ADC platform have failed to show effectiveness.
Overall, we believe we have been good sort of cash and maintain a strong balance sheet with which to execute our strategy. I'd like to thank our employees, partners and stakeholders for your loyalty during the past year. We look forward a strong year in 2024 and capitalizing on the momentum we've seen ahead.
I'll now turn the call over to Brandon Perthuis, our Chief Commercial Officer, to talk about our laboratory service business results during the fourth quarter. Brandon?
Thank you, Ming. It was a solid year for Fulgent, slightly exceeding our overall core revenue guidance, ending the year at $262 million, shattering our 2022 record by $81 million, an increase of 44% year-over-year. These numbers exclude any COVID-19 testing revenue.
We hit many new company milestones in 2023, which I will reflect on momentarily. At a high level, Precision Diagnostics continues to be the main growth driver and its Precision Diagnostics, where our technology shines the brightest. Precision Diagnostics performed well in 2023, contributing $132 million to the business. The main product outperforming was our Beacon Expanded Carrier Screen. Beacon has proven to be a very well-received product in the IVF space, offering gene content flexibility up to 787 genes and rapid turnaround time of approximately 2 weeks on average.
In addition, using our in-house developed informatics, databases and pipelines, we are able to deliver reliable detection rates in difficult genes such as pseudogenes or genes with high-sequence homology.
Our mix of clients for carrier screening services at this time is mostly IVF clinics as well as robust B2B partnerships. A few months ago, we announced the new Beacon 787 Expanded Carrier Screening panel. And we recently followed that up with launching the new Beacon Preconception Panel. Beacon Preconception includes an additional focus on manifesting carriers in mild disease compared to standard Beacon panels, making it a better fit for some clients working with [ egg ] donors or in the IVF clinic. We see Beacon continuing to be an important growth driver in 2024 as a result of additional market shakeup as well as sales and R&D execution.
Recently, we announced a new partnership with CooperSurgical, a global leader in fertility and women's health to offer exclusive newborn genetic screening panels to Cord Blood Registry families. Utilizing our Picture Genetics platform, CBR, the largest private newborn stem cell bank in the world now offers a range of testing options to its families, including CBR Snapshot which screens children for over 250 genes related to metabolic disorders, blood disorders, cancers, cardiovascular disorders, hearing loss and vision loss. Snapshot focuses on screening for conditions where early detection provides actionable information and may be managed with medication, diet or other therapies.
Secondly, CBR Portrait screens children for over 600 genes covering everything in CBR Snapshot along with additional genes related to hearing loss, actionable epilepsy, immunodeficiency, heart conditions and neonatal diabetes. CBR Portrait includes more than twice as many genes as CBR Snapshot and may identify more rare causes of these conditions. And if negative, the results further reduce the likelihood that a patient has the conditions included on the test.
Lastly, CBR Landscape screens children for over 1,500 genes and more than 1,000 conditions and includes a pharmacogenetic component that identifies the potential for adverse reactions to more than 100 medications.
Switching to AP. While Anatomic Pathology is critical to our mission of being a one-stop shop for physicians and contributes meaningfully to our overall revenue, we are seeing some headwinds in the business. That said, we have recently expanded our commercial footprint, plan to continue to layer on new sales hires, and we are committed to growing the business. In addition, we are making significant investments in operations, digital pathology and AI to improve our efficiency. We estimate seeing these investments beginning to pay off late in 2024.
Previously, we reported on pharma services when we provided a breakout of revenue. For clarity purposes, we have renamed this breakout of revenue to BioPharma Services to include any revenue related to clinical testing for pharma, biotech, CRO or research organizations, of which approximately $4 million had been previously classified under Precision Diagnostics in 2023.
Regarding BioPharma Services, we exited 2022 with tremendous momentum, and 2023 took off at a very fast pace. However, unrelated to Fulgent, some of our biopharma clients have had issues and some of those projects have either pulled way back or been terminated altogether. Unfortunately, this did affect 2 of our larger clients.
That said, we believe our BioPharma Services capabilities are stronger today than ever offering an impressive multi-omic platform, including technology for single-cell multi-omics rounding on our capabilities in whole genome, whole exome, RNA sequencing, tumor profiling, methylation sequencing, liquid biopsy, single-cell sequencing, special biology and pathology.
The focus for 2024 is to support new relationships and expand on existing ones. We'd like to thank all of our employees who have dedicated so much energy in making Fulgent a great success. We have an amazing team. As one of our important clients recently said, " Fulgent seems to have a magic wand." We don't, it would certainly be easier if we did, but we do have an absolutely amazing team. That said, 2023 has come to pass and now all focus and energy shifts to 2024. It's a fast-paced dynamic market, and we look forward to keeping our investors updated throughout the year.
I'll now turn the call over to Paul Kim, our Chief Financial Officer. Paul?
Thanks, Brandon. Revenue in the fourth quarter totaled $70 million compared to $68 million in the fourth quarter of 2022. $4 million came from COVID-19 testing in Q4, which was not part of our guidance. Revenue from our Core business totaled $66 million, which slightly exceeded our guidance of $64 million and grew 21% year-over-year. Gross margin was 36%. The increase in gross margin year-over-year is primarily related to $4 million of COVID-19 revenue recognized on previously billed tests due to successful insurance collections in the current year and to charges, which resulted from the wind down of COVID-19 business in Q4 of the prior year, including inventory reserves and accelerated equipment depreciation.
Before turning to operating expenses, I would like to explain an impairment charge we took this quarter. We incurred a onetime noncash goodwill impairment charge of $120 million. This charge resulted from a sustained decline in our share price and associated market capitalization, compared to the book value of our equity as of quarter end.
I want to reiterate that the noncash goodwill impairment charge was due to generally accepted accounting principles, given the current market capitalization. It's important to note that the goodwill impairment charge does not affect the company's cash position, and we do not believe it will have any impact on our future operations and we remain highly encouraged with the momentum we see ahead, as discussed earlier by Ming and Brandon.
The GAAP operating expenses were $176.4 million in the fourth quarter increased from $39.6 million in the third quarter of 2023. Non-GAAP operating expenses totaled $45.1, million increase from $29.4 million in the third quarter of 2023. Non-GAAP operating margin decreased 40 percentage points sequentially to a negative 24.8%, primarily due to lower COVID-19 testing revenue recognized, higher bad debt reserve and onetime legal fees.
Adjusted EBITDA loss for the fourth quarter was $6.8 million compared to $15.1 million in the fourth quarter of 2022. On a non-GAAP basis and excluding equity-based compensation expense, goodwill impairment loss and intangible asset amortization, income for the quarter was $8.3 million or $0.28 per share on 30 million weighted average shares outstanding.
Turning to the balance sheet. We ended the fourth quarter with approximately $848 million in cash, cash equivalents and marketable securities. We were active with our share repurchase program during the fourth quarter of 2023. We repurchased approximately 873,000 shares of our common stock at an aggregate cost of $22.9 million at an average price of $26.15 under the stock repurchase program announced in March of 2022.
As of December 31, 2023, a total of approximately $150.7 million remained available for future repurchases of our common stock under the stock repurchase program.
Now moving on to our outlook for 2024, starting with revenue. We may have some minimal revenue from COVID-19 testing in 2024, but we'll be guiding to core revenue, which is total laboratory services revenue for the company without COVID-19 testing.
We expect total core revenues to be approximately $280 million for 2024, representing a core growth of 7% year-over-year. Breaking down this guidance between Precision Diagnostics, Anatomic Pathology and BioPharma Services, the expected 2024 revenue is estimated as follows: $173 million from Precision Diagnostics, $96 million from Anatomic Pathology and the remaining $11 million from BioPharma Services. On Precision Diagnostics, which includes all of our clinical NGS revenue, oncology, reproductive services, rare disease, neurogenetics, B2B relationships with labs and our joint venture in China continues to be the highest growth area for the company in 2024.
As Brandon discussed, we have seen strength in reproductive services from our Beacon product line. Given the timing of certain lab arrangements, there may be variability quarter-to-quarter. Both Anatomic Pathology and BioPharma Services continue to be a major contributor to revenue in 2024. However, we are expecting a decline in both these revenue streams in 2024 as compared to 2023.
For anatomic pathology, which includes the business we have integrated from informed diagnostics, pricing pressure and lower contract rates are impacting revenue. BioPharma Services, which include sequencing as a service, which we sell to pharmaceutical businesses and is dependent on these partners have been impacted by projects that have terminated or have scaled back significantly. There is no revenue from our therapeutic development business anticipated for our 2024 guidance.
Turning to expected margins in 2024, excluding COVID-19 revenue and stock-based compensation. We expect non-GAAP gross margins to improve as we see the efficiencies of our integration efforts to take effect, reaching the mid-30% range and positioning us to approach our target of 40% by the end of the year. We expect to see lower non-GAAP operating margins in the quarters ahead as we further invest resources to grow our business with operating margin of approximately minus 20% for the year.
We remain focused on managing our spend and continue to believe that our foundational technology and platform supports a long-term strong margin profile. We expect associated cash burn for our therapeutics business of about $15 million to $17 million this year, which is contemplated in our EPS and our cash guidance provided today.
For the full year 2024 utilizing non-GAAP tax provision and average share count of 31 million, we expect that our non-GAAP loss to be approximately $1.05 per share for our shareholders excluding the stock-based compensation and amortization of intangible assets as well as any onetime charges.
Moving on to cash. Our cash position remains strong. We expect to have significant cash outlay of over $15 million this year as we build out and move into our brand-new 96,500 square foot facility in the Dallas area. This facility will have state-of-the-art operations, which include both pathology, neuropathology and the NGS labs will broaden our diagnostics reach as well as further streamline our clinical operations.
Excluding any stock repurchases or any other expenditures outside ordinary course, we still anticipate ending 2024 with approximately $800 million of cash, cash equivalents and investments in marketable securities. Overall, we see strength in our core business, which has grown organically and through strategic acquisitions, and we see good momentum ahead.
Thank you for joining our call today. Operator, now you may open it up for questions.
[Operator Instructions]. Our first question comes from the line of David Westenberg with Piper Sandler.
Good job in Q4. So just a couple of different things here. So let's just start with expectations for expanded carrier screening. Is that going to impact -- or do you anticipate -- still anticipate that being a front half of the year ACOG recommendation? How fast is that -- would that impact your revenue? And just given the fact that you are, I think, mainly working at IVF, would that kind of thing catalyze maybe further investments in the sales force in order to look at that opportunity outside of -- into the broader markets?
Thanks, David. It's Brandon. I appreciate the question. It's hard to comment on the timing of ACOG policy changes. But certainly, we see it trending in that direction. We are participating in some of those discussions and advocating for better policy statement. So look, expanded carrier screening is standard of care today in medical practice, right? Doctors realize that they treat it as such and the guidelines are just sometimes lagging in that area. But when they align and when they catch up, good things happen. So any positive movement in those guidelines would be just additional tailwinds around reimbursement and coverage. I don't think those guidelines change adoption too much, but really would perhaps have some positive impact on reimbursements and things like that. In terms of investing in the sales team and addressing the broader market, I mean, you are correct. A lot of our Beacon Expanded Carrier Screening today is coming from the IVF clinics, and we've yet to penetrate the OB-GYN market. We believe there's some sort of ancillary and parallel products that are needed to bundle with Beacon before we really can penetrate that OB-GYN market and we do have some development in those areas. And it's certainly an area we want to expand into. So we think once we have that product portfolio ready to go to market, we could invest significantly in the sales team to address that broader market.
Got it. That was a great answer. So just maybe on COVID testing. I mean, if you just back out, you get $4 million of COVID testing in Q4. I mean we are kind of in the heart of respiratory disease areas with only $4 million in revenue. Would it make strategic sense to just flat out exit that business or -- maybe -- I mean, I think you guys already are deemphasizing it. Just talk about strategies around that.
Yes. For all intents and purposes, we have exited the business. I mean the amount of new testing we're doing is tiny. The revenue you're seeing is a result of our efforts to collect on tests that we've run in the past. So we have a phenomenal revenue cycle management team. They're tenacious. We fight for every dollar that we can. And what you're seeing is results of our team collecting on tests that we had previously run. So the amount of new testing, new revenue is practically 0. I mean, like I said, it's pretty much completely deemphasized at the company. But again, we want to collect on every dollar that we're owed.
Makes a lot of sense. Just quickly for my last one, I just want to talk about capital deployment. You had a lot of share repurchases in 2023. Is that still the kind of the game plan in 2024? Or are you going to look at maybe some acquisitions, particularly like with the -- I mean, I'm guessing in the market, we're going to see some adjacent market opportunity from companies that are exiting going under selling themselves, et cetera?
Yes. Thank you, David, for the questions. I think we do see more opportunities available in the market and the evaluations will be giving more sense. But still, we're looking for the business, which they are profound in terms of there is a long-term business plan. And also, we're looking for the companies, which give us the -- that broaden our distribution channel or adding additional technology to make us even more efficient or more advanced in the testing area. So there is more opportunity we're looking for now and definitely at the current environment, I think we're in a good position to be a consolidator.
Our next question comes from the line of Andrew Cooper with Raymond James.
Maybe just first kind of real simply, it sounds like there's some moving parts around moving. I think you said $4 million from PDX down to BioPharma Services. So can you maybe just help level set where each subsegment came in for 2023? And then also just in 4Q, sort of what the growth looks like in each on an apples-to-apples basis so that we can have sort of the right expectation into 2024?
Yes, sure. Okay. I'll first comment on the numbers, and then I'll turn it over to Brandon, who can give color on where we see the decline and where we see the most amount or growth and the momentum. So for the fourth quarter, we had revenues of $70 million, approximately $4 million was coming -- came from COVID, $35.5 million came from Precision Diagnostics, the BioPharma Services was $4.7 million, and Anatomic Pathology was $26.3 million. For the balance of 2023, we had $104.7 million of revenues from Anatomic Pathology, $25.4 million from BioPharma Services and $132 million from Precision Diagnostics. We also had, as we previously discussed on COVID revenues, $27.1 million come from COVID. So the total revenues for 2023 was $289.2 million, of which revenue excluding COVID, or core was $262 million. For the $280 million guide that we're doing for 2024, that does not include any COVID. The projected are as follows in the 3 revenue categories. For Anatomic Pathology is $96.3 million. BioPharma Services is $10.7 million and Precision Diagnostics is $173.3 million. So as you can see, when you compare these categories versus 2023, we had a slight decline projected that we're anticipating for 2024 in Anatomic Pathology. We had a significant decline projected for BioPharma Services, and we see a lot of momentum behind Precision Diagnostics, and I'll turn it over to Brandon, who can give some color into the variability for each of those 3 areas.
Yes, certainly. We talked a little bit about it in the script. But on the AP side, the Anatomic Pathology side, that's really been a mix of issues. We've had some physician clients enter retirement. We've had practices be acquired. We've had practices merged with other groups. We had clients joining super groups. Those super groups usually have their own laboratory, for example. We did mention some limited pressure on reimbursement. I mean there is a little bit there. But it's really been a mix of things on the AP side. However, it's really nothing out of the sort of ordinary for the industry. And that said, I mean, we need to outpace that. So it's our goal to build a best-in-class sales team and find new opportunities to return AP to growth.
I think if you're looking at that division, we have the turnaround time, the quality subspecialty trained pathologist, the connectivity. We have what it takes to win, and we intend to do that.
But like I mentioned, we continue to invest in digital pathology and AI and our operations. We want to become more efficient in that area as well. So we do intend to address some of those losses by finding and forging new client relationships. On the pharma side, it's a little bit more of a -- sort of a centralized issue with -- affecting a couple of clients. So I think on the pharma headwinds, it really boils down to a couple or maybe just a very few significant sized clients that winded down their projects. This is mostly related to some of their financial stress and not related to any service issues with Fulgent. We mentioned that our BioPharma Services have really expanded. And now it's our goal to drive deeper relationships with our existing clients, but also continue to go find new clients. We do believe there demand for the types of products and services we've built. But I think the takeaway from that, even with the divisional headwinds in AP and pharma, we're still forecasting growth in 2024. It's around 30% growth in Precision Diagnostics. And this is the area where we can sort of best leverage our technology platform.
Okay. Super, super helpful. Appreciate that. Maybe just kind of dialing in a little bit on AP. If we go back to the deal announcement and sort of the first couple of quarters post, I think a lot of the logic was this was a strategic move, I think, in large part on being able to roll some of the contracts across the broader Fulgent business. I guess, with you just mentioning at least part of the headwind being a little bit lower contract rates, anything changed their substantially? Or is it more like you just said, Brandon, kind of normal course of business in the industry, a little bit of pressure, but nothing that changes the way you view that broader opportunity?
You are correct. Normal course of business, these are normal sort of constraints on contract pricing. It's what we've seen forever. Nothing at a macro level that would affect our ability to leverage these contracts across the organization. Actually, that's going quite well.
I think the thing they really know because we're talking about these categories is the power and the momentum that we're seeing from the Precision Diagnostics. If you kind of take a step back, and these are all organic numbers. In 2022 for Precision Diagnostics we did $97.3 million. For 2023, that $97.3 million is $131.1 million. And for the projected in 2024, we're anticipating Precision Diagnostics to be in excess of $173 million. That's over a 31% organic growth in that part of the business. So how the company was constructed, where we were founded, which is full sequencing and NGS. And that is having tremendous momentum in 2023, and we anticipate that momentum to continue in 2024.
Yes. I think both Brandon and Paul's comments, I think in terms of when we purchased this asset, we should -- we talked about the insurance coverage because those insurance coverage fueled our growth of the Precision Diagnostics such as the carrier screening business. But in terms of -- in general, the AP, it is pretty -- in January, this was not that impressive in terms of margins and it strongly depends on the labor. And we have been starting to implement our cost-cutting process. You will see the improvement of operating margins from the AP business. However, the AP business is one of the areas has lack of technology, investment where we heavily invested in the engine structure and technology. You will see the turnaround in the AP business. Maybe that's one of the areas that really drive the future of our digital AI innovation. So I will see that is -- we're -- it is taking us about -- 2 years -- into 3 years, try to turn the business around, but we also see a lot of potential for us to make the technology innovation in that area.
Okay. Super helpful. Maybe just one last quick one. Just an update on the beginning of the more national rollout for Fulgent Oncology. Would love a little bit of sort of what happened in the fourth quarter and what you've learned, if anything new? And what the trajectory looks like from your perspective there?
Yes, certainly. Thanks for the question. Well, recently, we've seen some tremendous momentum recently as in sort of January and February. So we'll be maybe talking more about this in detail on the next call. But we have had some significant wins in the Fulgent Oncology division. As we mentioned previously, we've secured very robust multi-X reimbursement for those assays, both north of $2,000 -- $2,200 for our solid tumor profile and our hematological malignancy profile. So yes, great momentum. Expanded the sales team. Some still pretty small, but we're sort of walking before we run approach to things. But we think the opportunity is there. The clients seem to be very happy with our turnaround time, our quality of report layout, our QNS rate, which is fantastic, just very, very good in terms of our ability to process small amounts of tumor tissue. So yes, the business has momentum, and I think next quarter, we'll be giving more color.
Our next question comes from the line of Lu Li with UBS.
So I guess I wanted to touch a little bit on carrier screening. I think in the prepared remarks, you mentioned a market shakeup in [ whole stage ]. Just wondering, can you give like any color in terms of why do you see share gain opportunity? And if that will bake into the guide?
Thank you for the question. We certainly benefited from the market shake up in 2023. It's one of the larger players exiting the space entirely. We gained significant market share during that event. A similar but different situation sort of happening in real time and we are gaining clients from that shake up as well. So I think, as I mentioned, clients are looking for stability. Our Beacon product is performing incredibly well. It has the right gene content, the right turnaround time, our ability to custom design these panels, do merge couple reporting for calculating residual risk. We have what it takes to win. So as these clients whose lives have been disrupted by these events, look for a new lab partner, I think we rank pretty high with them. So in 2024, I'd say we're living in real time. We are seeing the sales sort of pipeline and funnel fill up with new opportunities around carrier screening.
Got it. Appreciate it. I think second question coming back to the guidance. Do you see any like potential upside or downside to your guide?
Well, we always see upside to the guide. If you remember, last year, we raised our guidance twice. We first started off at $240 million of revenue. We raised it and then recently, it was at $260 million. And I'm just talking about the core and it came in at $262 million. We also anticipated that the cash burn for 2023 would be somewhat more meaningful than what we anticipated. But the ending cash and that's including buying back about $25 million worth of stock was a lot better. Then I think the general consensus that was out there. So we reserved the right to raise our guidance in 2024, and we also reserve the right to have our cash balance be better than the approximate $800 million.
Okay. I think I missed some of the part. I think the line is not that clear, but we can definitely go off-line on this. I guess like the final question. Any update on the LDT? Have you heard anything? And then when should we see that we saw anything? Any color would be great.
Are you asking about the FDA's potential oversight of laboratory developed tests?
Yes.
Yes. We haven't seen too much probably we've seen what you've seen. Some of the write-ups that have been published, the FDA warming up to the idea that they do have jurisdictional -- jurisdictional oversight of laboratory developed test.
Look, I mean, they're going to do what they're going to do. There's been a lot of pushback from industry leaders that this is not the right approach and that it could limit patients' access to really important test, but ultimately, they'll do what they're going to do. And we will react accordingly, right? If we need to put high-risk genetic testing through their process to get it approved, we'll do that. We have the quality systems in place. We have the infrastructure, and that could be a benefit to us, actually. Not -- maybe some of the other labs don't have the ability to get some of these things approved. So whichever way they go, if they continue to exercise jurisdictional discretion, we will continue to operate as LDTs. If they do give us a list of perhaps high-risk test that they want us to focus on putting through a 510(k) process, then we'll do that. Either way, I think we have what it takes to still perform in that new environment.
Thank you. That concludes our question-and-answer session and this concludes our call today. We thank you for your interest and participation. You may now disconnect your lines.