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United States securities and exchange commission logo
November 21, 2023
Paul Kim
Chief Financial Officer
Fulgent Genetics, Inc.
4399 Santa Anita Avenue
El Monte, California 91731
Re: Fulgent Genetics,
Inc.
Form 10-K for
Fiscal Year Ended December 31, 2022
Filed February 28,
2023
File No. 001-37894
Dear Paul Kim:
We have reviewed your November 14, 2023, response to our comment
letter and have the
following comments.
Please respond to this letter within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe a
comment applies to your facts and circumstances, please tell us why in
your response.
After reviewing your response to this letter, we may have
additional comments. Unless
we note otherwise, any references to prior comments are to comments in
our November 1, 2023,
letter.
Form 10-K for Fiscal Year Ended December 31, 2022
Note 2. Summary of Significant Accounting Policies
Reporting Segment and Geographic Information, page F-15
1. We note your response
to prior comment 5. Please further address the following
regarding your analysis
of ASC 280-10-50-1.
The title and
description of the role of each individual who reports to the CEO, who
you identified as
the CODM.
How often the CODM
meets with his direct reports, the financial information the
CODM reviews to
prepare for those meetings, the financial information discussed in
those meetings, and
who else attends those meetings.
The nature of the
discrete financial information prepared, why the discrete financial
information is
prepared, what it is used for, and who is using it, if the CODM is not
receiving it.
Clarify whether the discrete financial information is available at a level
Paul Kim
FirstName LastNamePaul Kim
Fulgent Genetics, Inc.
Comapany 21,
November NameFulgent
2023 Genetics, Inc.
November
Page 2 21, 2023 Page 2
FirstName LastName
below the two identified components and your consideration of
this lower level
meeting the definition of an operating segment. In this regard,
we note your
statements in the fourth quarter of fiscal year 2022 earnings
conference call that the
anatomic pathology business has a lower margin profile while the
precision
diagnostics and pharma services businesses have attractive margin
profiles.
The titles and roles of the persons, if anyone, that are held
accountable for operating
results of the anatomic pathology, the precision diagnostics, and
the pharma services
businesses and the R&D efforts for your drug development business
along with the
titles and roles of the persons these individuals report to in
the organization.
How the CODM goes about allocating resources, assessing
operating performance
and making key operating decisions using only consolidated
operating results and not
lower level results, including a description of the nature of
decisions made by the
CODM as they relate to the components. For example, address how
it was
determined that the annual burn rate for R&D spending for
clinical trials and drug
development efforts of the therapeutics development company is
about $50 million
per your third quarter of fiscal year 2023 earnings conference
call. Similarly, address
how it was determined to make the changes to the anatomic
pathology business go-
to-market strategy and sales structure due to the decline in this
business s revenues;
and how decisions are made about growing the pharma services
business.
How budgets are prepared, who reviews and approves the budget
at each step of the
process, the level of detail discussed at each step, and the
level at which the CODM
makes changes to the budget. In this regard, we note from your
third quarter of fiscal
year 2023 earnings conference call that the pharma services
business has an estimated
$22 million of revenues for fiscal year 2023.
The level of detail communicated to the CODM when actual
results differ from
budgets and who is involved in meetings with the CODM to discuss
budget-to- actual
variances. As part of your response, address the actions taken
should one of the
components fail to meet their revenue or operating income budget
goals in a
particular period.
Form 10-Q for Fiscal Quarter Ended September 30, 2023
Note 14. Goodwill and Acquisition-Related Intangible Assets, page 18
2. We note that your market capitalization during the third quarter of
fiscal year 2023 has
continued to decline below total equity as of September 30, 2023.
Please tell us your
consideration of performing an interim impairment test of goodwill
during the third
quarter of fiscal year 2023. Refer to ASC 350-20-35-30 for guidance.
Please contact Tracey Houser at 202-551-3736 or Terence O'Brien at
202-551-3355 if
you have questions regarding comments on the financial statements and related
matters.
Paul Kim
Fulgent Genetics, Inc.
November 21, 2023
Page 3
Sincerely,
FirstName LastNamePaul Kim
Division of Corporation Finance
Comapany NameFulgent Genetics, Inc.
Office of Industrial Applications and
November 21, 2023 Page 3 Services
FirstName LastName