Hello and welcome to the Fulgent Genetics Q3 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. As a reminder, this conference is being recorded. It's now my please to turn the call over to your host, Melanie Solomon, Investor Relations. Please go ahead.

Good afternoon and welcome to the Fulgent Genetics third quarter 2022 financial results conference call. Today, we will also be discussing the acquisition of Fulgent Pharma announced after the market close in a separate press release. On the call are Ming Hsieh, Chief Executive Officer of Fulgent Genetics; Paul Kim, Chief Financial Officer of Fulgent Genetics; and Brandon Perthuis, Chief Commercial Officer of Fulgent Genetics; Lawrence Weiss, Chief Medical Officer of Fulgent Genetics; and Dr. Ray Yin, President and Chief Scientific Officer of Fulgent Pharma. The Company's press releases discussing these two announcements are available in the Investor Relations section of our website, fulgentgenetics.com. The webcast portion of this call contains a slide presentation that we'll refer to during the call. Those following along on the phone who wish to access the slide portion of this presentation, they do so on the Investor Relations section of our website. For those who have access to streaming portion of the webcast, please be aware that there may be a few seconds of delay, and then you will not be able to post questions via the web. 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 will contain forward-looking statements. These forward-looking statements represent management's estimates based on current views and assumptions, which may prove to be incorrect. As a result, matters discussed in any forward-looking statements are subject to risks, uncertainties and changes in circumstances that may cause actual results to differ from those described in the forward-looking statements. The Company assumes no obligation to update any of the forward-looking statements it may make today to reflect actual results or changes in expectation. Listeners should rely on any forward-looking statements as predictions of future events and to listen to management's remarks today with the understanding that actual results including the Company's actual future results, may be materially different than 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 these forward-looking statements contained in the Company's filings with the Securities and Exchange Commission, including the previously filed 10-K for the year ended December 31, 2021, 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, certain 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 third quarter of 2022 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 earnings per share to most directly comparable GAAP financial measures. With that, I'd now like to turn the call over to Ming.

Thank you very much, Melanie. Good afternoon, and thank you for joining our call today to discuss our third quarter 2022 results and the acquisition of Fulgent Pharma. I will start with some comments on the transaction and then my vision for Fulgent before turning the call over to my co-founder, Dr. Ray Yin. Then, Brandon will review our products and go-to-market updates from the third quarter. And Paul will conclude with the financial and outlook before we take your questions. I'm pleased to announce that we have acquired Fulgent Pharma, a company I have been running with my co-founder, Dr. Ray Yin as a private entity. We believe this acquisition has the potential to rapidly transform Fulgent Genetics from a genetic diagnostic service business into a fully integrated precision medicine company focusing on oncology. We’re also joining our team of talented individuals, integrating our companies to address the continuum of care that we believe begins with diagnostics and ends with patient care. Let me take a step back and provide a brief history of these two companies. Moving on this timeline slide, Fulgent Pharma and Fulgent Genetics were previously both owned by Fulgent Therapeutics until 2016 when the businesses were separated ahead of the initial public offering of Fulgent Genetics. The Company has operated as a separate entity since 2016, enabling each business to focus on and scale its core operations across genetic testing and therapeutics. Over the last year, Fulgent Genetics has taken major steps to establish a foothold in the large market of oncology testing, most notably with the acquisition of CSI Laboratories in August 2021 and the opening of a state-of-the-art oncology testing facility in Southern California in May 2022. We believe with the platform we have built with Inform Diagnostics and CSI, we are uniquely positioned to deliver a full suite of genomic testing capabilities to our biopharma clients. We have been building this sequencing as a service business over the last few years, and we've seen a meaningful opportunity to continue expanding these operations in the years ahead. As we build up our genetic testing capabilities to offer a more comprehensive suite of services to our customers, we also recognize that both the therapeutics industry and our pharma business may benefit from the learnings and expertise in NGS and genomics. Fulgent Pharma has developed a novel nanoencapsulation and targeted therapy platform technology designed to improve the therapeutic window and pharmacokinetics profile of both new and existing cancer drugs. Based on the current study and our preset criteria, we believe our lead drug candidate has achieved proof of concept for the treatment of numerous cancers, including head and neck, ampullary, pancreatic, lung, and breast cancer. As presented at ASCO 2021, both Pharma and Diagnostics have well-validated technology platforms and talented science teams that have already taken on new and existing challenges in precision medicine and patient care. We believe that bringing these two entities back together will unlock significant long-term upside for both the pharma and diagnostics businesses while efficiently managing current and future risks. Our vision for Fulgent has always been to build a vertically integrated solution to potentially help patients battling and overcoming cancer. The novel nano-drug delivery technology platform synergistically underpins the combined business and helps to create a more sustainable and profitable business model in precision medicine for years to come. With a large database from the diagnostics business and a deep drug candidate pipeline from the pharma drug delivery platform, we can potentially bring more effective therapies or precision medicines while mitigating development risks. Our near-term opportunity includes using the FDA’s 505(b)(2) new drug submission pathway to potentially shorten development timelines. In the long-term, we believe we can leverage our insights from the diagnostics business to enable precision medicine through organic or partnered development strategies. With this combination, Fulgent Pharma will fully integrate with Genetics, adding 30 people, 11 of whom are PhD scientists and bolstering our existing base of more than 100 pathologists, geneticists, and PhDs. With this combination, our headcount is well over 1,000 people, spanning offices in California, Texas, Arizona, Georgia, Florida, Massachusetts, and New York. We believe with this capability, along with the strong cash position of Fulgent Genetics, we will continue to invest in this combined business while managing potential risks. This business combination and our mission is to build a vertically integrated platform to provide comprehensive services and solutions across the cancer care continuum, including early detection, diagnostics, monitoring, as well as drug discovery and development. The progress each business has made today enables each other with technology and insights toward a common goal of improving the continuum of care for patients. We believe we are well capitalized to advance a pharma pipeline with no additional financing or dilution to shareholders. We have an efficient research program in place, as well as manufacturing capabilities that may be leveraged for both sides of the business, overcoming potential future hurdles of drug development. We already have a team in place. The combination of these two businesses diversifies our access and will—assuming regulatory approvals—provide significant future revenue and margin opportunities through a lucrative target market. Before I turn over to Ray, I want to highlight that the target markets we have chosen for the pharma business are large and well-established. We believe there is an opportunity to capture a portion of this market through the indications we have chosen to focus on. Data from completed and ongoing studies of our current drug candidates developed with our novel drug delivery technology have provided early evidence that some of these candidates may achieve the target indications. We believe we have the potential to bring some exciting drug candidates to the market through our platform. Now, I would like to introduce my co-founder and the President and CSO of Fulgent Pharma, Dr. Ray Yin, to provide more details on the platform and the pipeline candidates we have been working on. Ray and I have been working together since 2004. When I served as the CEO of Cogent, Inc., we later founded Fulgent Therapeutics together in 2011. Ray?

Thank you, Ming. I'm pleased to be here today to discuss the pharma business. As Ming mentioned, we have been working together for many years. In addition to Fulgent, I also founded ANP Technologies, Inc., a nanobiotechnology-based company and have served as CEO and CTO since its inception. Prior to that, I worked at the U.S. Army Research Laboratory and managed its nanobiotechnology for chemical and biological defense programs. Our efforts at pharma are based on a novel nano drug delivery platform technology capable of delivering various water-insoluble or poorly soluble drugs. Unlike some drug delivery materials, such as human serum albumin (HSA), which is only soluble in water, our nano drug delivery materials used for drug candidate development are soluble not only in water but also in various organic solvents, and are capable of hot melt mixing with active pharmaceutical ingredients (APIs). We believe these advantages will allow us to generate a much broader range of drug candidate formulations, particularly amorphous drug candidate formulations, which can be used for both IV and oral formulations, with the goal of improving pharmacokinetics (PK) profiles, as well as safety and efficacy. With this platform, we believe we can use a 505(b)(2) approach to shorten development timelines for active pharmaceutical ingredients (APIs) that the FDA has previously approved. This plug and play approach allows for multiple chances during our development, thus giving us more opportunities to succeed. Additionally, the simple manufacturing process also lowers product costs significantly. Our lead drug candidate, FID-007, has a manageable safety profile, with the maximum tolerated dose not reached at 125 milligrams per square meter per week. A Phase 1 clinical trial, dosing at 160 milligrams per square meter per week, is currently ongoing. The Phase 1 trial is being conducted by the University of Southern California in collaboration with the National Cancer Institute. We have observed preliminary evidence of anti-cancer activity in heavily pretreated patients across different tumor types, for example, head and neck and ampullary cancers, as well as checkpoint inhibitor-resistant cancer patients. So far in the Phase 1 trial, we have not observed any serious side effects related to peripheral neuropathy. Using the same nano drug delivery platform, we have generated a deep pipeline of wholly owned drug candidates focused on head and neck, pancreatic, lung, breast, and colon cancers. In addition to our lead candidate FID-007, we have two other drug candidates, one for colon cancer, and the other is a new chemical entity (NCE) targeting the STING pathway, which have also been tested extensively in preclinical studies. If we continue developing FID-007 under the 505(b)(2) pathway, we expect to begin Phase 2 and 3 trials in two to three target indications in the next one to two years, with data readouts expected over the next three to four years. We also have a robust preclinical pipeline, which includes additional 505(b)(2) and novel NCE therapeutic candidates, for example, multikinase inhibitors and BMI1 inhibitors, potentially for additional oncology-related indications. We believe our genomic database can further fuel the discovery and development of additional new drug candidates, which can potentially address various unmet needs, such as drug resistance, through precision medicine to cancer patients, as biomarkers play a key role in creating these targeted therapies. I will now turn it back to Ming to wrap up on the transaction.

Thank you, Ray. This transaction reinforces my commitment to both businesses. I believe it will realize our vision of building vertically integrated solutions to potentially combat cancer. Based on the current studies and the pre-designed criteria, we believe we have proof of concept for the FID-007 candidate. The initial target indication for head and neck cancer is promising, providing an attractive entry point, and possibly rapid commercialization trends assuming regulatory approval are top probabilities in the therapeutic segment. In the long-term, we have opportunities to leverage data insights from the diagnostics business to enable precision medicines through proprietary or partnered development strategies as we continue to grow our diagnostic business through clinical investment and strategic M&A. I will now turn over the call to Brandon Perthuis, our Chief Commercial Officer, to talk about our diagnostics business’s results during the third quarter. Brandon?

Thanks, Ming. Turning to our core business, which we define as our sales minus all COVID-19 related testing, both PCR and NGS. Core business revenue was $56 million in the third quarter compared to $27 million in the same period the prior year, and $45 million in the second quarter of 2022, representing 110% growth year-over-year and 24% growth sequentially. Our investments in Fulgent Oncology, Pharma Services, and CSI Inform Diagnostics are performing well as we begin to tap into synergies across the business units. With our diversification into oncology and pathology, added to our robust test menus for pediatric genetics, reproductive health, hereditary cancer, neurological conditions, and more, we have created one of the largest test menus in our industry. Not only do we offer one of the largest test menus, but we also continue to excel in turnaround time, depth of coverage, reliability of CNV calls with proprietary algorithms, ease of use and access with custom portals and interfaces, along with the ability for our clients to customize their gene panels. Historically, we have served as a reference lab for many hospitals, academic medical centers, and commercial laboratories. However, now with direct access to the payers covering over 300 million lives, we'll be able to address the commercial pay market. This opens up an entirely new channel for Fulgent. That said, while we hoped to have these contracts rolled up with the ability to sell into for the fourth quarter, it is taking a bit longer than we predicted. We now anticipate the contract roll-up will be completed by the end of the year, allowing us to penetrate the direct pay market starting in 2023. Paul will address our Q4 forecast in detail, but at a high level, we are projecting core business revenue at $52 million, down sequentially, however, up 86% year-over-year. The sequential decline is due in part to significant seasonality in our Inform Diagnostics business related to a drop in elective surgeries and procedures around the holiday season, as well as the delay in managed care contract roll-up and the delayed adoption and reimbursement of HelioLiver. We view these challenges as transitory and expect our business to gain momentum throughout 2023. On the sales team front, we have recently completed comprehensive cross-training for both the legacy Fulgent sales team and the new Inform Diagnostics sales team, along with restructuring to align with the corporate go-to-market strategy. This accomplished two things: it greatly increased sales coverage for Inform Diagnostics products and it brought together the subspecialty sales teams to take full advantage of our product portfolio and synergies. In terms of synergies, we are currently focused on penetrating the large IDX client base with Fulgent products, for example, selling a hereditary cancer test to gastroenterologists and urologists for hereditary colon cancer and hereditary prostate cancer panels, respectively. These are just two clear examples. In addition, with our specialty offering and nerve fiber testing, IDX has established a very large national adult neurology client base. As we get our contracts rolled up, these clients are the target audience for our adult neurogenetics tests, which now has a menu of over 80 unique panels. As we mentioned on previous calls, there were several territories where IDX had not had a historical sales presence, but had the necessary contracts to sell. We see these as green territories and we've now placed representatives in several. The total size of the sales team is now right at 50 people, including our Pharma Services and Oncology divisions. A quick update on HelioLiver: we have now onboarded over 90 clients. We generally view these as the early adopters. Unfortunately, even as early adopters, they have not fully integrated HelioLiver into their patient care. We believe this is just a matter of time, however, there's still work to be done to get there. For example, many clinicians want to see practice guidelines before wide-scale adoption or local coverage determinations. We believe the CLiMB prospective study is a critical piece of evidence to drive to these endpoints. Recruitment for the study is complete and the team aims to publish the data in the second quarter of 2023. In addition, we expect HelioLiver to be submitted to the FDA in the third quarter of 2023. Turning to COVID-19, the U.S. is now in a much better place with COVID, with cases steadily trending down since summer. Many of the screening programs have been stopped, including employee screening and back-to-school programs. This has all happened much faster than we predicted. However, since the early days of COVID-19, it has been very difficult to predict the state of the virus and testing. To adjust to the rapid decline and remain cost-efficient, we have shut down our Houston operation and scaled back operations in Temple City. We have significantly reduced operational costs to support COVID-19 testing by rightsizing the lab team to support the remaining test volume. We still maintain the laboratory infrastructure, but if needed, we can ramp back up support for high-volume COVID-19 testing very quickly.

Thanks, Brandon. Revenue in the third quarter totaled $106 million compared to $228 million in the third quarter of 2021, in line with our overall guidance of approximately $105 million. Billable tests in the quarter totaled 952,000 compared to 2.2 million in Q3 of the last year. The year-over-year decline in testing was again due to COVID testing dynamics. Breaking down revenue a bit further, roughly $50 million came from COVID-19 testing in Q3 compared to our guidance of $51 million. Revenue from our core business totaled $56 million, which exceeded our guidance of $54 million and grew 110% year-over-year. As a reminder, our core revenue includes our NGS business contribution from our JV, CSI, and Inform Diagnostics, and excludes NGS COVID testing from the CDC. As demand for COVID PCR testing remains volatile and generally trending lower, we continue to take a conservative stance on expected revenue from COVID testing. We remain focused on executing our post-COVID growth opportunities, which include the integration of Inform Diagnostics, expanding the reach of CSI capabilities, executing on additional investment and partnership opportunities, ongoing work with Helio on joint commercialization, and growing our footprint from previous operations. Our ASP in the third quarter was $111, higher than the $94 we saw in the second quarter of 2022. Our ASP has fluctuated along with a mix of coding testing. The cost per test for the quarter was $63 versus $45 in the second quarter of 2022, largely due to the shifting mix away from COVID testing to more of our core testing, including testing from Inform Diagnostics. As a reminder, cost per test on our core portfolio can be as high as $200. So, as COVID testing continues to decline, the average cost per test will increase to a more normalized level for our core genetic testing portfolio. Gross margin was 43.6%, down 37 percentage points year-over-year and down 8 percentage points sequentially. The reduction in gross margin was again due to the testing mix, including higher costs associated with our core genetic testing portfolio, including testing from Inform Diagnostics. We anticipate gross margin will be under pressure in the fourth quarter as our anticipation from COVID revenues will be very low combined with lower expected core revenues and our previous guidance, which I'll elaborate on in the guidance section of the call. Now, turning over to operating expenses. Total GAAP operating expenses were $45.7 million in the third quarter, down from $52.5 million in the second quarter of 2022. Non-GAAP operating expenses totaled $37 million, consistent with last quarter. Non-GAAP operating margin decreased 13 percentage points sequentially to 11%. While the expense structure of our legacy Fulgent business remains lean, we have incurred a number of incremental expenses as a part of our recent acquisitions as expected. We have made significant investments in people, infrastructure, and operations to support our growth, putting pressure on our operating margins for the near term. We remain confident that these investments will translate into demonstrable ROI and drive future growth of our core business. At the same time, we're pleased with our ability to still generate positive EBITDA and cash flow during this transformative time for our business. Adjusted EBITDA in the third quarter was $19.7 million compared to $167.3 million in the third quarter of 2021. On a non-GAAP basis and excluding equity-based compensation expense, intangible asset amortization, restructuring costs, and acquisition costs related to Inform Diagnostics, income for the quarter was $9.8 million, or $0.32 per diluted share on 30.9 million weighted average shares outstanding. Turning over to the balance sheet, we ended the third quarter with approximately $918 million in cash, cash equivalents, and marketable securities. We generated $20.8 million of cash from operations during the quarter, despite the significant investments we made in our business in the quarter. I'd also like to highlight that we were active with our share repurchase program in the third quarter. We repurchased over 780,000 shares of our common stock at an average cost of $34.7 million at an average price of $44.49 under the stock repurchase program announced in March. As of September 30, 2022, a total of approximately $204 million remained available for future purchases of our common stock under the stock repurchase program. In addition, subsequent to September 30, 2022, we repurchased another 244,000 shares of our common stock for an average cost of $9.1 million at a price of $37.33. Moving on to our outlook for 2022, we saw a sharp drop in demand for COVID testing orders in Q3. As such, our expectations for Q4 COVID has changed significantly. We now anticipate approximately $8 million of COVID revenues versus the previous expectation of $54 million. This translates into $433 million of covered revenues for the full year inclusive of the $425 million we've done in the first three quarters of the year. As stated in the past, revenue from COVID testing has been a nice lift to the business, though very difficult to forecast. Moving on to our core revenue guidance, which will include contributions from Inform Diagnostics. We now expect core revenues to be approximately $178 million for 2022, representing a growth of 92% year-over-year, which takes into account the outperformance we achieved in Q3. This translates into guidance of $52 million in core revenues for the fourth quarter. The weakness in our core revenues is attributable to falling short on anticipated revenue from HelioLiver, combined with the utilization and capitalization of reimbursement contracts from the acquisition of Inform Diagnostics, as well as seasonality. We see these issues as temporary and believe we'll be back on track to grow our business again in 2023. With $433 million in COVID revenues and $178 million in core revenue, we expect total revenue to be approximately $611 million for the year. We expect there will be continued volatility with COVID testing and remain focused on executing our strategy to drive momentum in our core business. From a profitability standpoint, we remain focused on investing in our business to drive sustainable long-term growth. That being said, we expect to see meaningful pressure on operating margins in the quarters ahead as we integrate and further invest resources into our recent acquisition. Our conservative assumption for COVID testing demand will result in lower growth in operating margins relative to the record high margins we experienced during the COVID crisis. Long-term, our foundational technology platform supports a strong margin profile and we’ll continue to manage our spending with discretion to drive operating leverage. For our full year 2022, using a 28% blended tax rate and a share count of 32 million, we expect non-GAAP income of approximately $5.60 per share for our shareholders, excluding stock-based compensation, amortization of intangible assets, restructuring costs, and acquisition costs related to Inform Diagnostics, as well as any other one-time charges. The third quarter marked a notable milestone for Fulgent with core revenue exceeding COVID revenue for the first time since the early days of the pandemic. We have also set the bar for our core business at over $200 million annual revenue runway going forward even with the anticipated weakness in our Q4 revenue guidance. Shifting gears with the acquisition of Fulgent Pharma, we anticipate reporting on this business segment separately going forward, which will include capital and cash requirements to fund that robust pipeline. We'll also be reporting on progress of key milestones of this business on each of our earnings calls. Our updated guidance is posted in slides on our Investor Relations website, which show the detailed breakout I just discussed. The Pharma slides we just presented today are also posted on our website, as Melanie mentioned. Thank you for joining the call today. Operator, you may now open it up for questions.

Thank you. We’ll now be conducting a question-and-answer session. Our first question today is coming from David Westenberg from Piper Sandler. Your line is now live.

Hi, this is John Peterson filling in for Dave Westenberg. Thank you for taking my questions and congratulations on the acquisition of Fulgent Pharma. It's a really exciting opportunity. First, I'd like to ask about your implied organic growth rate, which appears to be quite high for your core business. Can you discuss how you've managed to gain so many hospitals and so much volume during the pandemic? How has that been going for you? Thank you.

I think that we all know one of our major businesses for the last two years has been COVID, and we are very proud to be part of the company combating the pandemic. As the pandemic nears its end, that's a very good sign for the country and the entire economy. We have always focused on investing our resources to build long-term growth. As you'll see, we announced that our core revenue has outperformed COVID revenue in Q3. Part of our revenues is from our acquisitions, specifically from CSI and Inform Diagnostics. It will take us a bit more time to build efficiencies from these acquisitions and integrate with our genetic testing business. However, we see that strategy has been working for us. With the new acquisition we announced today, we hope it will build an integrated solution that not only focuses on diagnosis but also increases the complete solution, which is patient care.

Thank you. Could you discuss how we should view the underlying margins moving forward now that the COVID revenue guidance has decreased and COVID is tapering off? Thank you.

Yes. So, I'll take that one. The biggest surprise for us during the quarter was a drastic drop-off in the COVID testing demand, which we incorporated into our conservative COVID guidance for Q4. And because of the sharp drop-off, it's going to take us a little bit of time—our guess is one to two quarters—to realign our investments and our cost structure, particularly related to the COVID part of the business. Brandon mentioned the temporary weakness in our ambitions for core revenue. We believe that will be back on track in 2023. So, what we're doing and have been doing is realigning and restructuring our costs to ensure that even on an intermediate basis, our margin profile and leverage are intact. We believe it'll take one to two quarters to adjust, and then once we're back on the growth path for our overall core business—without depending too much on COVID—we anticipate the weakness we foresee in the margin profile for Q4 will start to improve.

And also about the Fulgent Pharma acquisition, you mentioned several different indications that you could potentially be going after in the next coming years. Are there any of those in particular that you're most interested in? Because there were several that were mentioned. Thank you.

Yes. Thank you, David. Initially, we are focused on the indication for head and neck cancer. This area is lacking some therapies, but we also see strong potential in pancreatic and ampullary cancers, among other diseases. In terms of the pipeline, we also see our strong cancer candidate, which focuses on colon cancer. That drug is one we’re trying to push, and we aim to accelerate its clinical research approaches to get it into clinical trials as soon as possible. We will provide updates once we integrate the two businesses and meet with FDA authorities.

Our next question is coming from Dan Leonard from Credit Suisse. Your line is now live.

Hello and thank you. Is there any way you could frame for us the cash and capital needs of the Pharma business over the next, call it, one to two years?

Sure. I'll take that on, and then, after my comments, if Ming and Ray have any additional comments. The capital needs for the pharma business for 2023 and 2024 won't be that significant. We anticipate total cash needs in each of the years will be somewhere in the mid-teens, so anywhere from $15 million to $17 million per year. We believe that the advantage we have is there's been a lot of work and investment that went into the Pharma asset, as Ming indicated, from its inception in 2011. The capital needs for the next couple of years should be around $15 million to $17 million per year. So, it's not going to disrupt the capital optionality that we have, given our cash position.

As we can see, we’ve raised more than enough cash, as Paul indicated. That is a good sign, and it doesn't mean that we will face any issues in terms of development or in getting the new drug candidates into clinical trials.

And then for my follow-up question, for Brandon, I wasn't sure I fully understood the contract roll-up feature you were talking about with your guidance. Could you circle back to that and maybe elaborate on what's evolved differently than planned?

Yes, certainly. Thanks for the question. It's just mechanics, Dan. Those contracts need to be assigned to Fulgent. We have to work with the payers to do that. So just contract mechanics, just pushing paperwork, and it's just taking longer than we predicted. I don't know if there's any reason behind it—staffing shortages, perhaps—but it's just mechanics taking longer than we thought. Once they're all rolled up to the Fulgent corporate level, then we will be able to deploy those contracts across our various entities.

And then final question. You mentioned the new $200 million baseline in revenue for core Fulgent. Do you have any framing thoughts for us on how rapidly you think that could grow in 2023?

I believe our intention for any investment we make is to grow faster than the marketplace. Due to our diversified portfolio and overall market reach, we wouldn't be surprised if growth of our overall business falls anywhere from around 10% to 25%. That would be the goal we have at the moment. Again, we'll be laying out guidance when we announce the next quarter's call for 2023. So, we'll have more specified ranges and details at that point. Our intention has always been to grow faster than the marketplace.

Thank you. We reach the end of our question-and-answer session. And ladies and gentlemen, that does conclude today's teleconference and webcast. You may disconnect your lines at this time and have a wonderful day. We thank you for your participation today.