Fulgent Genetics plunges 38% on 2026 loss guidance, customer exodus
Largest customer accounting for 22% of revenue transitions testing services in-house, offsetting Q4 earnings beat
Fulgent Genetics shares plummeted 38% on Friday, one of the steepest single-day declines in the genetic testing company's history, despite beating fourth-quarter earnings expectations. The crash came after management issued 2026 guidance projecting a significant loss as its largest customer transitions testing services in-house.
The stock, which closed at $15.33 after dropping $9.43, erased more than $290 million in market value during Friday's session. Trading volume surged to 2.38 million shares, nearly six times the daily average, as investors rushed for the exits following the company's February 27 earnings announcement.
Fourth-quarter results presented a mixed picture. Fulgent reported revenue of $83.3 million, representing 9% year-over-year growth but falling short of analyst estimates that ranged from $84.5 million to $87.1 million. However, the company delivered a non-GAAP earnings per share of $0.16, significantly beating analyst expectations of a loss between $0.06 and $0.09 per share.
The sharp market reaction centered on 2026 guidance, which revealed a looming revenue crisis. Fulgent projected full-year 2026 revenue of approximately $350 million while forecasting a non-GAAP loss of $1.45 per share—dramatically wider than consensus estimates for a loss between $0.33 and $0.59 per share.
The primary culprit: Fulgent's largest customer, which accounted for 22% of 2025 revenue totaling $70.8 million, is moving its testing operations in-house. The company expects a $59 million year-over-year revenue reduction from this single customer, with the most severe impact hitting during the first half of 2026. The customer transition "creates a significant near-term headwind," according to Paul Kim, Fulgent's chief financial officer.
Management outlined a strategy to offset the customer loss through recent acquisitions. The company's purchases of Bako Diagnostics and StrataDx are expected to contribute $50 million to $55 million in revenue during 2026, helping to replace roughly 85% to 93% of the lost business from the departing customer. Fulgent also noted its strong cash position of $705.5 million at year-end 2025, providing substantial financial flexibility during the transition period.
"We delivered on our strategic and product innovation roadmap in 2025, with sustained momentum in our laboratory services business," said Ming Hsieh, Fulgent's chairman and chief executive officer. He highlighted progress in artificial intelligence and digital pathology solutions, along with therapeutic development pipeline advances including Phase 2 progress for FID-007 and Phase 1 for FID-022.
Analysts maintained an average "Hold" rating on the stock with a target price of $32.00—more than double Friday's closing price—according to MarketBeat data. The dramatic disconnect between analyst targets and current market valuation reflects the severity of investor concerns about customer concentration risks.
The 38% decline represents the stock's worst single-day performance since going public and pushes shares near their 52-week low of $14.57. Before Friday's crash, Fulgent had traded as high as $31.04 over the past year, reflecting enthusiasm for the company's COVID-19 testing business during the pandemic and subsequent diversification into genetic testing and therapeutic development.
Fulgent ended 2025 with full-year revenue of $322.7 million, up 14% from the prior year, while generating non-GAAP income of $13.2 million or $0.42 per share. However, the company reported a GAAP net loss of $60.5 million for the year, underscoring the challenges in achieving consistent profitability outside the pandemic testing boom.
Investors will be watching closely for signs that the Bako and StrataDx acquisitions can successfully offset the customer loss, as well as any updates on additional business wins to replace the departing revenue. The company's guidance assumes it will end 2026 with approximately $685 million in cash and investments, factoring in anticipated tax refunds of $106 million and completion of the recent acquisitions.