[FLGT stock] Fulgent Genetics Q4 2020 Earnings Call (3/4/21)

Ladies and gentlemen, thank you for standing by and welcome to the Fulgent Genetics fourth quarter 2020 earnings conference call. At this time, all participant lines are in a listen-only mode. After the speaker presentation, there will be a question-answer session. During the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star zero. I now have a conference to you speaker today, Nicole Borcha. Please go ahead.

Great, thanks very much. Good afternoon and welcome to the Fulgent Genetics fourth quarter and full year 2020 financial results conference call. On the call today are Ming Hsieh, Chief Executive Officer; Paul Kim, Chief Financial Officer; and Brandon Perthuis, the company's 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 use 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 statement. The company has 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 from 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-Q for the quarter ended September 30, 2020, which is 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 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 fourth quarter of 2020 for more information, including the description of how the company calculates non-GAAP income and earnings per share, and a reconciliation of these financial measures to income and income per share, the most directly comparable GAAP financial measures. With that, I'd now like to turn the call over to Ming.

Thanks, Ming. We'd like to again express our sympathy to those who have been impacted by this terrible virus. It has been a difficult time for many families in our country in general. The spike in cases and testing that was predicted by medical experts to happen in the fall indeed became a reality during the fourth quarter. We again saw lockdowns increase across many states, which did slow our momentum in our non-COVID-19 business. However, we have seen increasing strength in our business outside of COVID-19. Our non-COVID-19 business grew approximately 43% year over year in the fourth quarter, and we signed on over 15 contracts with new customers for services such as hereditary cancer, cardiovascular genetics, carrier screening, and neurodegenerative genetics. During the fourth quarter, we worked tirelessly to increase COVID-19 testing capacity, maintain our best-in-class turnaround time, and expand our testing footprint nationally. These efforts led to a quarter where we were able to service over 3 million patients with COVID-19 testing. At this time, we have the capacity to handle north of 100,000 tests per day across our two laboratories, with the ability to continue to scale. During the fourth quarter, we handled accelerating volume while maintaining our best-in-class RT-PCR turnaround time, delivering approximately 90% of tests within 24 hours. We believe our ability to scale our business to roughly 228 times that of what we were handling just one year ago is almost unprecedented in our industry. It is indicative of everything Fulgent represents. We are a technology platform company with the ability to excel in many areas of healthcare. We are a team of engineers, geneticists, genetic counselors, and business operators with a fierce motivation to make Fulgent a dominant force. We have proven with our platform and infrastructure that we can run a laboratory that far outpaces many genomic labs in terms of efficiency and scalability, which translates to best-in-class growth and operating margins, which Paul will elaborate on in minutes. Early in the pandemic, our COVID-19 patient volume was concentrated around drive-through testing sites and was somewhat limited to select regions in and around Southern California. Today, our COVID-19 customer base is incredibly diverse with a national reach. At this point, we have direct agreements with 11 counties for our services, many large corporations, testing organizations, sports teams, sports conferences, cruise lines, and hundreds of nursing homes and assisted living facilities, just to name a few. We announced during the fourth quarter an extension of our New York City Department of Education and Test and Trace contract. The New York City Department of Education selected Fulgent as a partner after evaluating a number of different COVID-19 testing providers through a competitive bid process. Our ability to retain this business through the 2021 school year demonstrates that our platform is not only capable of meeting the stringent needs of the school system, but our service in doing so resulted in a very positive customer experience for the New York City public school system. We believe we have built an incredible system for back-to-school testing, and we have now had months of experience and many thousands of students tested. We believe this early start in an emerging testing market will help drive additional opportunities for Fulgent. In fact, we are excited to announce we were recently selected by Clark County in the Las Vegas school district to be their back-to-school testing partner. We look forward to continuing to deploy our resources across the U.S. to help students return to school safely. One other exciting announcement, which Ming briefly mentioned, is that Fulgent was selected by the Department of Homeland Security as one of four labs chosen for a $2 billion, five-year indefinite delivery, indefinite quantity contract for COVID-19 testing. This is the largest contract we have been awarded to date. We believe with our industry-leading turnaround time, capacity, and delivery platforms, we have the ability to take on a meaningful portion of this contract and help our country's first responders stay healthy and safe. The demand for our RT-PCR COVID-19 test remains strong for both existing clients and new opportunities. We continue to build a robust sales funnel in a variety of different areas as the country continues to view testing as a critical tool to fight the virus and reopen our country. RT-PCR remains the gold standard. While rapid tests are available and being used, they cannot replace the accuracy, meaning sensitivity and specificity, of RT-PCR. Many organizations, government entities, and counties are requiring RT-PCR results. However, we do see an opportunity for rapid testing and RT-PCR results to work together. To this day, many labs are struggling with turnaround time, which limits the usefulness of RT-PCR. However, we continue to provide results in generally less than 24 hours. We believe that fast RT-PCR testing continues to be the best option for testing. We continue to monitor the situation regarding new mutations and strains of the virus. Importantly, we want to make sure our RT-PCR test can detect these new strains, which we have been able to do. Recently, there was information released by the CDC that warned that some of the new variants may be missed in testing, and there were in fact some labs who had this issue based on the RT-PCR targets used. We are pleased to report that our RT-PCR test can detect the variants published to date. While almost all of our COVID-19 testing volume has been RT-PCR based, I will remind you that we actually introduced a next-generation sequencing based test prior to launching RT-PCR. We realized quickly that the rapid turnaround time of RT-PCR is critical in controlling the spread of the virus; therefore, we did not commercialize the next-generation sequencing test as a diagnostic test. Fast forward to today, next-generation sequencing is now in the spotlight of this pandemic due to its ability to identify strains and mutations and screen for potential new mutations. We have now hit a perfect intersection of Fulgent's core competencies. We are primed and ready to take on massive NGS testing volume. With our sequencing capacity and expertise, we can handle approximately 10,000 NGS tests per day. We are currently working with local and federal government on genomic studies of this virus, which are just getting started. We believe our ability to offer both NGS and RT-PCR puts us in a leading position to partner with organizations doing these studies. Another key area of opportunity for us has been our PICTURE at-home COVID-19 test. This has proven to be an important differentiator for Fulgent and has helped many people by providing convenient access to testing. PICTURE is being used for employee testing, student testing, pre-travel testing, and athletes, just to name a few. Highlighting a couple specific use cases, we partnered with New York City and JetBlue to provide testing kits to travelers leaving New York airports during the holiday season in response to the testing travel mandates by the state. Also during the holidays, LA County launched a new COVID-19 home test collection program which allowed certain county residents to do complementary testing from home. The PICTURE platform is more than just a COVID-19 testing platform; it is a platform designed to change the way genomic testing and other testing is delivered. We believe patients will become increasingly proactive in their healthcare, and consumer-initiated testing will be a rapidly growing market. With the PICTURE platform seamlessly integrated with telemedicine, we are uniquely positioned to expand the service offering by adding many new tests in the future. We also believe we have dramatically expanded PICTURE's visibility and brand recognition due to the role the platform has played in COVID-19 testing. While COVID-19 testing has been unwavering in its demand on our business, we have continued to invest time and resources in our non-COVID-19 operations. We are excited to announce that we have launched a next-generation sequencing based pharmacogenomic test. Our pharmacogenomics test will target 44 genes and more than 140 drugs to enable personalized dosing and healthcare, and will determine if a patient is a rapid metabolizer of certain drugs or a slow metabolizer, adjusting dosing accordingly, or perhaps a different drug altogether could be recommended. While other pharmacogenomic tests are RT-PCR based and include limited targets and information, applying our expertise in next-generation sequencing allows us to unlock much more information and provide patients a more comprehensive report. We look forward to commercializing this product in 2021 and beyond. In addition to our new pharmacogenomic test, we continue to expand the number of disease-specific panels we offer and the number of conditions we test for. As published in the NCBI Genetic Testing Registry (GTR), we now offer over 19,000 genetic tests, making the Fulgent menu one of the largest in the world. We intended 2020 to be the year we dramatically expanded our commercial sales team; however, COVID-19 threw us an unexpected curveball. That said, we intend to dramatically increase our sales team headcount by the end of 2021. We believe we now have the product menu, turnaround time, and cost structure to drive significant expansion in the United States and overseas. In addition to a vastly expanded sales team, an important part of our go-to-market strategy has been increasing our managed care contracts. An incremental benefit of COVID-19 testing has been our increased exposure to payers. In the fourth quarter, we built over 1.8 million more insurance claims than we did in the fourth quarter of 2019. We have become an in-network laboratory with several regional payers and now have close working relationships with several large national payers. We believe we will continue to make meaningful progress becoming an in-network provider for our services. Another opportunity for us is the extension of our software platforms to customers, which Ming briefly touched on. We recently launched two new software products: the Fulgent Vaccine Management Platform and the Fulgent Community Testing Software as a Service product, both of which leverage the testing platforms we have built to support our massive COVID-19 testing operation. The Vaccine Management Platform is a layer added to our extremely successful technology platform, which is used by drive-through, walk-up, and other testing operations. Now on the same web-based platform, patients are able to schedule their vaccination, pick a location, arrive pre-registered with a QR code, get a digital confirmation of their first injection, and reminders for their second. This will be a fee-per-click product. The second product, the Fulgent Community Software as a Service, is a completely novel approach for us. Some counties and municipalities have their own laboratory and testing operations but lack the platform technology to scale and effectively manage testing. In this case, they can now take a license to our Fulgent Community Software as a Service product. Essentially, it's a Fulgent front end, but instead of pointing the order to our laboratory, it will point it to our customer's lab. This will be a subscription service billed annually along with a fee per click. We have a number of irons in the fire as we work to emerge on the other side of this pandemic, and we look forward to what the future holds for Fulgent. I would now like to turn the call over to Paul Kim, who will walk you through our fourth quarter and full year 2020 financial performance. Thanks.

Record fourth quarter revenues totaled almost $295 million, an increase of more than 3,400% compared to the fourth quarter of 2019. Billable tests in the quarter totaled almost 3.2 million, growing more than 200 times the volume of Q4 last year. The vast majority of this volume was from our business related to COVID-19. Despite the re-emergence of a state-wide lockdown in California and stay-at-home orders elsewhere, we saw stable demand for our traditional genetic testing business in Q4. Our core business in Q4 was up 43% year-over-year and 17% sequentially from Q3. We finished the year at almost $37 million in revenues from our core business, which was slightly lower than our original projection before the pandemic hit. Overall, our Q4 results far exceeded our expectations, largely due to the unwavering demand for our COVID-19 capabilities. Our customer base continued to diversify, and in the fourth quarter we added six major customers who are contributing multi-million dollars each in quarterly revenues. Our ASP in the fourth quarter was $93, slightly lower than the $98 we saw in the third quarter. While our ASP has largely remained stable over the last few quarters, the modest decrease is due to the increasing mix of tests for COVID-19 versus non-COVID-19. Cost per test for the quarter was a record low of $16, an improvement of approximately 36% compared to the last quarter. Gross margin continued to improve and was up more than eight percentage points sequentially. The gross margin improvement we've seen is a further testament to the scalability and leverage in our platform as revenue increased almost three-fold sequentially and we drove further efficiencies in our lab operations and unit economics. Now turning to operating expenses, total GAAP operating expenses were $17.3 million in the fourth quarter, up from $11.9 million in the third quarter. Non-GAAP operating expenses totaled $14.8 million, up from $9.2 million last quarter. Our non-GAAP operating margins improved 12 percentage points sequentially to 77.6%. We continue to make meaningful investments across all our departments in the quarter, but our top line outperformance and increasing operating efficiencies continue to outpace the investments into our business. Based on our profits, we recorded a 26% tax rate in Q4. Adjusted EBITDA for the fourth quarter was $230 million, compared to $1.1 million in the fourth quarter of 2019. On a non-GAAP basis and excluding equity-based compensation expense, income for the quarter was $167.5 million, or $6.20 per share, based on 27 million weighted average diluted shares outstanding. Turning over to the balance sheet, at the end of the fourth quarter we had $432 million in cash, cash equivalents, and marketable securities. During the fourth quarter, our equity shelf program enabled us to sell approximately 4.7 million more shares, raising almost $204 million in cash, net of issuance costs. We have not executed on any shelf program since December 31, as we minimize dilution to our shareholder base. On the other side of the balance sheet, our contract liabilities sit at $26.6 million. I'll also quickly touch on the financial highlights for full year 2020. Revenues totaled $422 million, up almost 1,200% year over year. Operating income totaled $290 million versus an operating loss of $428,000 last year. Non-GAAP EPS was $9.10 based on 24.1 million weighted average diluted shares outstanding. Now moving on to our outlook, we see significant opportunity in 2021 to extend our leadership with COVID-19 testing, while our genetic testing business should continue to expand. As we look at revenue streams in 2021, we see a more diverse mix of revenue drivers contributing to COVID-19. In addition to RT-PCR testing, we see growth potential from our NGS-based COVID-19 test as we continue to win more customers who want sequencing to understand the characteristics of COVID-19.

Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. And to withdraw your question, just press the pound key. Please stand by while we compile the queue roster. Our first question will come from the line of Steven Ma from Piper Sandler. You may begin.

Oh, great. Thank you, and congratulations on the quarter and the full year. Well done. Thank you, Stephen. So just a couple questions on California and then also on the 2021 guide. I know from our internal channel checks, you seem to be pretty overweight in California. So should we think of that trend continuing in 2021? And how has that been trending in the first months of the year as well? And then secondly, on the cadence of the guide, your Q1 guide implies about 40% of total 2021 revenues. Just maybe a little bit of details on that. Do you expect a drop in COVID testing volumes in Q2 and just maybe a little bit more color on that? Thank you.

Okay, thanks for the question, Steven. In terms of the concentration in California, because we are positioned in Los Angeles and Los Angeles County, it is true that a meaningful amount of revenues come from that county. But having said that, we have continued to diversify our business within the state to various other counties, as well as a number of other states. So if you take a look at the characteristics of our Q4 revenues at about $295 million, only about a quarter of that came from LA County. The other thing I would also say is in terms of the guidance, back in 2020 we were one of the few companies to have guidance throughout the course of the year, and we're pleased to exceed the expectations in each one of those quarters and for the year. In looking out at 2021 for a company that is largely centered around COVID testing, we believe that we have confidence in our market share as well as in our positioning to have formal guidance even this early on in the year. If you take a look at our confidence, that's based on the contracts that we have and the outlook even as deep as Q3 and Q4. That can certainly change if the testing landscape changes, but on a conservative basis we feel confident with the $800 million in revenue. So if you break out the $800 million in revenue into two components, NGS and non-NGS, we see the non-NGS portion or approximately $730 million in revenue being a 65 to 35 split. That can certainly change if our market position and the testing environment changes as we get deeper into the year, but that's what we feel comfortable with. On the flip side, on the NGS side, based on the progress we made from a number of different fronts including reimbursement and corporate customers that we have been introduced to through COVID, some of those corporate customers are very well aware of our capabilities and we have executed on contracts which bolsters our confidence in being able to hit that $70 million. In terms of the gradient of how that $70 million will play out, we see Q1 NGS revenues being flat to slightly up, but that should accelerate nicely as we get into the future quarters throughout 2021.

Okay, great. Thanks for the color. And maybe just if I can sneak in one quick one on the Department of Homeland Security's contract. Can you give us a little bit more details, such as how many other parties are within that contract, and what proportion of that $2 billion can you get? Give us a sense. Is it all the testing that you can handle or is there some other structure in terms of the volumes you might get from that? Thank you.

Yeah, thanks Steven. The Department of Homeland Security contract, $2 billion over five years, it's an IDIQ contract. We're one of four laboratories that are named in that contract. So that's going to have pretty far reach from the Department of Homeland Security, multiple departments, a lot of employees. And it's essentially driven by the demand for testing. So these are task orders from the government that come in that need testing services and testing kits. I think with Fulgent's delivery platform, our reach, our turnaround time, of the labs that are a part of it, I do think we stand out a little bit. We do have the capacity to take on a meaningful portion of that. I mentioned where we are today, north of 100,000 per day capacity, and between our two labs we can continue to grow that. So it'll be entirely driven by the demand for testing. Some of these departments are still getting back to work full-time, so to speak. So I think as the country begins to reopen and we start thinking about back to work and back to a sense of normalcy, testing with the Department of Homeland Security will continue to be a growing area for Fulgent and testing in general.

Okay, great. Thank you.

Our next question comes from the line of Kevin DeGeeter from Oppenheimer. You may begin.

Hi, this is Susan calling in for Kevin. First question, I actually just want to tap on to the geographic split between California and other areas. Based on our model, it looks like the percentage from California increases in Q1. Is that correct?

The percentage of business that we have in California it should be pretty consistent with what we saw in the fourth quarter. If you take a look at our major customers that are providing say over $10 million of revenues within the fourth quarter, we have a number of different counties driving those revenues. Aside from LA County, San Bernardino County, we have Santa Clara County, Long Beach, Anaheim, several others. And we see the level of testing and the demand for our services being pretty consistent within those customers compared to the fourth quarter.

Great. Just one more related to COVID. Do you guys have a sense of how large the market is for COVID variant characterization?

We also are building several projects with various pharmaceutical companies related to NGS tests for COVID-19. To answer your question directly, how does the market look? The market for testing goes up and down through each one of the waves, and we're in a different environment now because of the vaccine distribution. So we fully recognize that, and that's the reason why we have confidence in the $800 million. But we are anticipating the immediate testing revenues from say drive-through sites to go down. If it doesn't go down, we can certainly change our guidance. But what we are excited about is our positioning within that testing market. We believe we're gaining market share and we can clearly see that. The other thing that we see in the testing area is that you will begin to see the concentration not only in LA County but in the state of California become more diversified. I've talked about the state of New York, but other big states like Texas and Florida, we believe the testing revenues in those states will increase. And then if you combine that with the need to do work for the variants analysis, which first centers around COVID but really is about highly infectious diseases, we believe we can offer a tremendous amount of value to governmental bodies by being invited to execute on full sequencing. And the other thing that Ming just mentioned is from the commercial basis, we are being invited more to do full sequencing for pharmaceutical organizations. So if you take a look at the testing environment, we think that it's a better characterization to report not just COVID and non-COVID. We think a better way to characterize it would be NGS versus non-NGS. And then if the software revenues, which we're very excited about, become more meaningful, we certainly look forward to updating the investment community.

Oh, thank you for all that color. If I may, that was a very good, long answer. A couple questions on your core business. Do you guys have a priority listing in mind for the different things that you mentioned for business development in the future?

Yeah, so let me take a shot at that and then I'll turn it over to Ming about some business development. In terms of the COVID landscape, if you take a look at how we built our business, the amount that we invested in COVID from a dollar perspective was very minimal. In terms of the priorities, we believe our ability to run a business efficiently and show our capabilities can certainly have a very good positioning within the COVID marketplace. What we are more concentrated on is the NGS side, really utilizing our technologies to bring better business discipline, value, costs, and sustainable adoption into the marketplace. So that includes things like next-generation sequencing that we were fully comfortable with. We are also evaluating other kinds of modalities to address the wider market. And I'll turn it over to Ming, who will make comments on business development and investment in certain areas in the future.

Thank you. Our next question comes from the line of Erin Wright from Credit Suisse. You may begin.

Great, thanks. So just to clarify, and sorry if you said this already, but in terms of the $70 million in NGS testing revenue, how much of that is related to COVID testing versus the underlying business?

A minor portion is related to COVID testing. Some of these contracts are new. We're very excited about it. We think those new contracts certainly have a lot of upside that we haven't incorporated into that $70 million.

Okay, so that's helpful. And then what does your guidance assume in terms of reimbursement for COVID PCR testing? How are you thinking about the sustainability of ASPs?

Hey Erin, it's Brandon. Our expectations for ASPs are to stay generally flat. I think they're in a sweet spot. We haven't heard of any expected changes in that, so our model would keep ASPs pretty flat. And the collection experience, Erin, has been very, very good. We've written off hardly any receivables that we have on the balance sheet. The reimbursement experience has been fast because over half our revenues are through reimbursement right now, and the experience has been very good. So we feel very good about the rate as well as what we'll encounter in 2021. It's evolving, but it looks like NGS COVID-19 is going to fetch a bit more of a premium in terms of ASPs as well, so we'll see how that falls into the mix.

Okay, great. And when we think about some of these partnerships with like sports teams, cruise lines, are they largely exclusive relationships or have any sort of minimum volume commitments? And how are you thinking about the competitive landscape with antigen testing?

Some of them are exclusive, some are semi-exclusive, some are multi-year, some have minimums, some don't. With the number of clients we have, the volume we're doing, you can imagine it's pretty dynamic in terms of what these terms look like. But there's a lot of competition out there. I do think we stand out of the crowd quite a bit. We have the complete service offering, our customers love us, we deliver, meet our turnaround time, make their lives easier with our technology platforms, and we have the capacity. We're confident in the contracts we have. We'll continue to be their preferred partner. Antigen testing pops up. Some of our largest municipalities have tried some of those kits that were given to them by the federal government. They don't use them very much. The accuracy is not there. It's faster, but I think people want to get the answer right. The feedback we receive from our customers that have run those in parallel, they continue to see RT-PCR as the gold standard, especially when you can turn it around in less than 24 hours depending upon when we get the sample. Some of our RT-PCR results are out in eight hours. So I think that's a pretty powerful tool that we have to continue to offer.

Okay, great. And then one last one—

Okay, that's helpful. And in light of new markets and what you're contemplating, how should we be thinking about your revenue mix in 2022? Do you think a huge component of it will be non-NGS testing? Will it be meaningful in 2022, or does it just become all NGS testing, or is there another third that we don't even know about?

I think the short answer is we believe we'll have both NGS and non-NGS testing. If you take a look at how we laid out the guidance, we talked about the $70 million and what that includes and why we're excited. On the COVID testing front, there are different categories of COVID testing: drive-through sites and then there are post-vaccine contracts that we have signed on that include things like schools, travel and leisure, and opening up corporations. When you take a look at what they want to do in terms of testing as part of their policy, we believe that has business extension beyond 2021. To the extent of how much that would be, we see what we have signed on and feel comfortable with the guidance. But there's potential that that market might still continue to be healthy. What we have more confidence in, regardless of how the landscape looks, is our positioning within that market. We believe we're continuing to capture market share within the COVID testing space even today as vaccines are being administered.

Okay, that's helpful. Thank you.

Thank you. Our last question will come from the line of Sonja Nam from BTIG. You may begin.

Hi, thanks for taking the questions. Hopefully a couple of quick ones. One on COVID surveillance going forward. Just a clarification on the Department of Homeland Security contract: does that entail next-gen sequencing solely, or is that a combination of both PCR and next-gen sequencing? And are you seeing interest from local and state governments around surveillance of the COVID pandemic? But are you seeing any concerted effort at the national level in terms of building out infrastructure for not only COVID surveillance but for other pandemic surveillance down the road? Are you seeing anything internationally in terms of potential interest or demand?

The Department of Homeland Security contract is strictly RT-PCR. They're looking to screen their employees, enable early detection, get people out of the workforce, keep the rest healthy, minimize the spread. I think it's exactly what RT-PCR is meant to do in an asymptomatic screening type setting. We are seeing national efforts around NGS. The CDC is involved, HHS is involved. We are involved at that level. The genomic testing is again in the spotlight right now. Monitoring these variants, seeing how they're responding to therapies, seeing how they're responding to the vaccine. Are the vaccines working on these variants? We've seen some homegrown variants pop up in the United States. I also think we're going to learn a lot about therapeutics in the future. I see RT-PCR also playing a role as a bit of a companion diagnostic. As we differentiate between the flu and COVID-19, those symptoms are very similar, but perhaps those treatments could be vastly different. So we do need a definitive diagnosis more so than just symptoms. I think we'll continue to see a push to do more genomic studies, and we applaud the money being set aside as part of the budget and the CDC and HHS involvement.

Great, that's very helpful. And then just lastly, in terms of your international opportunities for investing in international opportunities going forward, could you talk about what that could look like? Would that largely mirror what you're doing in the U.S., or are there distinct opportunities outside the U.S. that you're considering? Thank you. Ming, do you want to take that last one?

Okay, thank you. Thank you.

And I'm not showing any further questions in the queue. I'd like to turn the call back over to the speakers for any closing remarks.

Thanks so much. Looking forward to speaking to investors in the week ahead. Have a great day. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.