FLGT - NASDAQ

Greetings, and welcome to the Fulgent Genetics, Inc. Q4 2024 Conference Call and Webcast. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to your host, Melanie Solomon, Investor Relations. Please go ahead.

Morning, and welcome to the Fulgent Genetics, Inc. Fourth Quarter and Full Year 2024 Financial Results Conference Call. On the call today 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 ir.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 will contain forward-looking statements. Forward-looking statements represent management's estimates based on current views, expectations, 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. The company assumes 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 events, 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 the forward-looking statements, contained in the company's filings with the Securities and Exchange Commission, including the previously filed 10-Ks for the year ended December 31, 2023, 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 2024 for more information, including the description of how the company calculates non-GAAP income or loss, earnings or loss per share, non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating profit or loss and margin, and adjusted EBITDA, and any reconciliation of these financial measures to income or loss, earnings or loss per share, and operating margin, the most directly comparable GAAP financial measures. With that, I'd now like to turn the call over to Ming Hsieh. Thank you, Melanie.

Good morning, and thank you for joining our call today. I will start with some comments on the fiscal year 2024 and our two business lines. Then Brandon will review our product and go-to-market updates for our lab services business in the fourth quarter of 2024, and Paul will conclude with the financials and outlook before we take your questions. We are pleased with our results for the fourth quarter and the year. We have shown growth in our laboratory services business for the year and have good momentum in 2025 as we continue to invest in the business. In our therapeutic development business, we now have a clinical pipeline. In 2024, we began a phase two clinical trial of FID-007 in combination with cetuximab in patients with recurrent or metastatic head and neck squamous cell carcinoma. So far, we have dosed seventeen patients in this trial and are very encouraged by the preliminary results. We intend to publish at an upcoming ASCO meeting in June. We expect to complete enrollment of up to forty-six patients by late 2025. We continue to estimate the total clinical trial cost for the phase two trial to be approximately $10 million. Our second clinical candidate is FID-022, a nano-encapsulated siRNA for the treatment of solid tumors, including potentially colon, pancreatic, ovarian, and bile duct cancers. We submitted an investigational new drug application to the US FDA in December 2024, and it was cleared in January 2025. We expect to enroll the first patient in a phase one trial in the second quarter of 2025. We expect the trial cost for the phase one and one b trial to be approximately $8 million. As a reminder, our drug candidates were formed with our nano-encapsulation technology, which includes many issued active patents and active patent applications. The target therapeutic payload is designed to improve therapeutic windows and the pharmacokinetics profile of both new and existing cancer drugs. I'm excited about the progress we're making in our clinical pipeline and the potential for both FID-007 and FID-022. We are targeting heavily pretreated patients with few options left, and I hope we will be able to provide additional treatment options to further their lives. Our anticipated cost for this program is very reasonable, and we believe our investment will be rewarded. Finally, we have made significant advancements in the development of antibody-drug conjugates using our novel patent linker and payload platform technology. In preclinical studies, we observed our ADCs have better efficacy over various tumors with a broad range of targeting antigen expression levels when compared with some of the other ADC benchmarks on the market. At the same time, ADCs honing in on novel targets using our novel platform technology are also being prepared for the goal of generating leading candidates for clinical trials. Overall, I'm pleased with the growth we have seen year over year in our core laboratory services business and the progress we have made with our therapeutic development business. We continue to be in a strong financial position to execute our strategy. I would like to thank our employees, partners, and stakeholders for their hard work and loyalty in a great year for our business. We look forward to further progress in 2025. I'll now turn the call over to Brandon Perthuis, our Chief Commercial Officer, to talk more about our laboratory services. Thanks, Ming.

It was another strong quarter for Fulgent Genetics, Inc. and a strong close to the year, delivering fourth-quarter growth of 14% year over year and 6% growth sequentially, in addition to slightly exceeding our annual core revenue guidance of $280 million. Throughout the year, we executed on both the commercial and operational fronts. I'll discuss each as we break down and reflect on our three business areas within laboratory services. First, anatomic pathology had a great quarter, growing sequentially 9% as a result of our revised go-to-market plan. We believe this quarterly growth outpaced the market. We did scale the sales team throughout the year and plan to continue to do so in 2025. This team was successful in driving new business by taking our excellent turnaround time and quality to position clients who were not receiving the same level of service from their previous labs. To put it in perspective, it was not uncommon for our sales team to uncover accounts that were receiving two to three-week turnaround times from another lab while we were delivering two to three-day turnaround times. Our sales team has built a robust pipeline of opportunities, which we believe will lead to continued momentum. In addition, we took several steps throughout the year to improve operational efficiency, including relocating our lab to our recently purchased building in Coppell, Texas, and consolidating our New York lab into the Coppell operation. Overall, we're pleased with the performance of our AP business and are optimistic about its future. Turning to precision diagnostics, this area continues to expand, delivering fourth-quarter growth of 23% year over year while flat sequentially. The sequential performance was in large part due to the timing of several new client wins that were pushed into early 2025. Reproductive health outpaced some of our other tests due to the market adoption of our Beacon expanded carrier screening product. Even with the strong growth in Beacon, we consistently delivered on our turnaround time and maintained exceptional quality. This is a true testament to our technology platform and operational excellence. We also recently launched a significant new product, Exome and GenomeRise. RISE stands for RNA Integrated Sequencing Evaluation. With this service, we are co-analyzing the DNA and RNA, which could potentially increase diagnostic yield by as much as 30%. Integrating DNA-centric and RNA-centric analysis maximizes diagnostic utility by assessing the RNA-level impact of coding region splice changes and variants in noncoding regulatory regions of phenotypically relevant target genes. This is a significant improvement and is the first major advancement in exome and genome testing in several years. Our rollout has seen significant interest from clients, and we believe this may be a paradigm shift in how we diagnose rare diseases. Our newly launched novel NIPT test, Nova, is performing well with our early adopters. Clinicians are realizing the value of a test that combines aneuploidies, microdeletions, and de novo point mutations, leading to higher detection rates for severe genetic conditions. The focus of 2025 will be to build out the sales team to create additional awareness and demand. Within our precision diagnostic space, we recently announced a very exciting new partnership with Foundation Medicine. Via this new partnership, Foundation Medicine will be launching two tests: FoundationOne Germline and FoundationOne Germline More. Both tests are powered by Fulgent's proprietary technology platform and analyze single nucleotide and copy number variants. When combined with Foundation Medicine's comprehensive genomic profiling tests, FoundationOne CDx, FoundationOne Liquid CDx, FoundationOne Heme, and FoundationOne RNA, germline testing supports healthcare providers in building a more comprehensive molecular profile for their patients. Foundation Medicine is one of the largest providers of tumor profiling services, and we are excited to partner with them to bring these germline tests to market. Foundation Medicine plans to begin accepting orders for these tests in March. This is the second partnership we have launched for germline oncology testing after previously announcing a large win with the VA hospitals. We are optimistic these wins can be transformational for our oncology volume. Our biopharma services had an excellent quarter, delivering 56% growth quarter over quarter, going from $3.9 million in the third quarter to $6.1 million in the fourth quarter. As we mentioned in previous calls, our capabilities in pharma services have drastically expanded, allowing us to address many more client research studies. These capabilities include high-demand services such as proteomics, spatial biology, and more. While we still see some large swings quarter to quarter in this business, it is our hope that in the near future, we can hit a steadier state of growth, leveraging an expanded client base and pipeline of opportunities. In closing, we are pleased with our performance in both the fourth quarter and the year. The growth we witnessed this year was organic, leveraging our expanded laboratory capabilities, sales team performance, and strategic partnerships. That said, we continue to evaluate opportunities for M&A and believe our strong cash balance puts us in an enviable position. We'd like to again thank our employees and stakeholders for their dedication, and we look forward to another great year in 2025. I'll now turn the call over to Paul Kim, our Chief Financial Officer. Thank you, Brandon.

Full-year core revenue, which excludes COVID-19 revenue, totaled $281.2 million, a growth of 7% compared to revenue of $262.1 million in 2023, and slightly exceeding our overall guidance of $280 million. The full-year revenue from our three revenue streams was as follows: $168 million from Precision Diagnostics, $97 million from anatomic pathology, and the remaining $16 million from biopharma services. The 2024 GAAP loss was $42.7 million or a loss of $1.41 per share. We had non-GAAP income of $15 million or $0.49 per share for the year. Now for the quarterly results. Revenue for the fourth quarter totaled $76.2 million compared to $70.5 million in the fourth quarter of 2023. Revenue from COVID-19 testing is negligible. Revenue from our core business totaled $76 million. GAAP gross margin was 41.8%, and on a non-GAAP basis was 44.2%. Gross margins improved over the course of the year and sequentially, showing the benefit of our continued efficiencies and streamlining of our business. Now turning to operating expenses. Total GAAP operating expenses were $48 million in the fourth quarter compared to $43.9 million in the third quarter of 2024, primarily related to the reversal of a legal accrual and lower R&D spend in Q3. Non-GAAP operating expenses totaled $37.4 million compared to $32.9 million in the third quarter of 2024. Non-GAAP operating margin increased approximately one percentage point sequentially to a minus 5%, primarily due to higher revenue and margin. Adjusted EBITDA income for the fourth quarter was approximately $774,000 compared to a loss of $6.8 million in the fourth quarter of 2023. On a non-GAAP basis and excluding equity-based compensation expense, intangible asset amortization, income for the quarter was approximately $1.2 million or $0.04 per share based on 31.2 million weighted average diluted shares outstanding. Since the end of the fourth quarter, as of today, we have repurchased approximately 185,000 shares at an aggregated cost of $3.1 million. As of today, a total of approximately $147 million remains available for future purchases of our common stock under the repurchase program. Turning to the balance sheet, we ended the fourth quarter and the year with approximately $828.6 million in cash, cash equivalents, restricted cash, and marketable securities. The increase over the third quarter is primarily from a federal tax refund received in the fourth quarter. Moving on to our outlook for 2025. With minimal future revenue from COVID-19 testing expected, we're guiding to core revenue, which is total laboratory service revenue for the company without COVID-19. We expect total core revenue to be approximately $310 million for 2025, representing core growth of 10% year over year. We expect growth for this year in all areas of our core business, which include precision diagnostics, anatomic pathology, and biopharma services. With recent customer wins, we believe reproductive health testing remains strong and will help drive growth in precision diagnostics. Anatomic pathology experienced a decline in 2024 but ended the year with a strong fourth quarter. We believe this momentum will carry into 2025, although we expect variability from quarter to quarter as these services are dependent on patients being treated by healthcare providers, which may experience seasonality. The biopharma services, which we sell to pharmaceutical businesses, are dependent on those partners, so it may be variable from quarter to quarter. We have been building this business and expect moderate growth. The expected 2025 revenues from these three areas of the business are estimated as follows: $187 million from Precision Diagnostics, $106 million from anatomic pathology, and the remaining $17 million from biopharma services. Turning to expected margins for 2025, excluding COVID-19 and stock-based compensation, we expect non-GAAP gross margins for the full year to slightly exceed 40%, continuing the strong momentum we've experienced in recent quarters. We expect to see lower non-GAAP operating margins at approximately minus 15% for the year as we continue to invest in business growth, develop further laboratory operations, and enhance our existing laboratory facilities. We remain focused on managing our spend and continue to believe that our foundational technology platform supports a strong margin profile longer term. We expect associated cash burn for our therapeutics development business of approximately $25 million this year, which is contemplated in our EPS and cash guidance. We expect our GAAP EPS to be a loss of approximately $1.95 per share, excluding any future one-time charges, using a 32 million average share count. Utilizing a non-GAAP tax provision and an average share count of 32 million, we expect our full-year 2025 to be at a net non-GAAP loss of $0.65 per share, excluding stock-based compensation, impairments, and amortization of intangible assets, as well as any one-time charges. Finally, our cash position remains strong. We are focused on efficient capital allocation that allows us to reinvest in our business, fund key initiatives, and support future growth. Excluding any stock repurchases or other expenditures outside the ordinary course, which could include M&A, we anticipate ending 2025 with approximately $780 million of cash, cash equivalents, and investments in marketable securities. Overall, we see strength in our core business, which has grown both organically and through strategic acquisitions, as we see good momentum in the years ahead. Thank you for joining our call today. Operator, you may now open the floor for questions.

Certainly. We'll now be conducting a question and answer session. If you'd like to ask a question, please press *1 on your telephone keypad. Our first question is coming from David Westenberg from Piper Sandler. Your line is now live.

Hi. Thank you for the question. I've got a few, so I'll just start with Ming Hsieh and the key milestones to look for in FID-107, endpoints, and whatnot. Why is the clinical trial only going to cost $10 million, and what should we expect at ASCO? And then just finally, do you see head and neck as the biggest opportunity, or are you more excited about the indications afterward?

Yeah. Thank you, David. That's a great question. The cost for the clinical trials, we expect to enroll about forty-six people, using an average of around $200,000 per patient. And that's about it. Okay. I think it's pretty much on track with our spending so far. So that's for the head and neck cancer. We are very encouraged with preliminary results. As you remember, last year at ASCO, we published the results for FID-107 as a single agent for the treatment of head and neck cancer, and we showed very promising results at last year's ASCO conference. This year, the data we have with the seventeen patients, or a bit more by the time in June, in combination with cetuximab, shows great synergy between the two drugs working together.

Okay. Got it. And this one, I don't know if this one is for Paul or Brandon. I'm guessing Paul here. On Q4, it has you at 14% year-over-year growth. That's really good growth. Can you talk about whether there were any one-time dynamics going on in the quarter that you got? Because you are guiding to a little bit of a slowdown from that 14% in the following year.

Frances, do you want to take that?

Yeah. Yeah. Certainly. I can take that. And thanks for the question. No, I can't think of any one-time events that happened in the fourth quarter. I think it was blocking and tackling and gaining market share. So I think you are correct. You know, Q1 of this year will be slightly down from Q4, but that's in large part due to some of the healthcare benefits resetting, meaning, you know, co-pays, coinsurance, and deductibles resetting in the first quarter. We also had two significant adverse weather events in Coppell and Dallas, Texas, and Texas doesn't do well with snow and ice. So there's just a couple of sort of seasonality-type things that we experienced in Q1. It's going to bring it down a little bit from Q4. But I think, you know, maybe more applicable is looking at it, you know, year over year. And it normalizes those events that we experienced similar events, you know, every year in the first quarter. So I think in 2024, in the first quarter, we were at $63 million, and in this quarter in 2025, the first quarter will be well north of that. But we are coming off a record quarter in the fourth quarter. We had these sort of seasonality dynamics in the first quarter, so we expect it to come down a little bit. But, you know, no sort of macro issues or any one-time issues experienced in the fourth quarter.

Perfect. And then, and that catches us right. Did you say revised panel on anatomic pathology, or did you say precision diagnostics? And can you maybe talk about that 9%, what happened? What was the revised plan that would drive the 9% sequential growth? Thank you. And that would be my last question.

Sorry, David. Are you saying what did we change in the anatomic pathology to a market trend? Did I you mentioned there was a revised plan. I think you said on anatomic pathology, although it could have been precision diagnostics, but you highlighted a sequential growth of 9% because of the revised plan. I was hoping you could dig a little bit further in terms of what that revised plan was.

Yeah. Certainly. Yeah. That was only in the anatomic pathology. So, you know, the anatomic pathology business is diverse. We have GI services, GU services, derm services, general surgical pathology, and in 2024, we really made a decision to go pretty hard after the derm business. As I mentioned in the script, for whatever reason, there's just sort of a national issue right now as it relates to some of the derm turnaround times. We have tremendous capabilities in dermatopathology. We have very good pathologists that have been subspecialty trained in dermatopathology. And our turnaround times have been fantastic. So as I mentioned, you know, we're delivering two to three-day turnaround times. We're seeing some of the competition out there with two or three weeks, and these are patients who are anxious for results, and they need to know, you know, these are results of their biopsy, if it's cancer or not, for example. So we really deployed the sales team throughout the year to go target that particular area of our business, and it's done well for us. We've captured a lot of dermatopathology business for the AP division. In addition, we did expand the sales team some. And I think we're going to continue to do so. Almost every new salesperson we've brought on has been successful in growing their pipeline, their business, and it's a testament to our quality and turnaround time at the lab and good sales leadership and good sales recruiting. So we want to continue to scale the sales team this year. And, like, I think we're pretty optimistic that, you know, AP has turned a bit of a corner, and we've had a few down quarters, you know, since we acquired the business, but, you know, Q3, especially in Q4, we're seeing some good growth, and we think that's going to carry into 2025.

Yeah. David, we've had a very strong fourth quarter that we closed out the year. Brandon talks about the dynamics, you know, of the anatomic pathology business, but we've had, you know, growth in others as well. And as Brandon talked about, we're going to continue to invest in sales and marketing probably more aggressively than we have before. So, for example, if you take a look at 2024, excluding stock-based compensation, our selling and marketing expense was $32 million. We, you know, in that area, and we see, you know, specific, you know, parts of that business as good investments as we expand the sales organization.

Thank you so much, and congrats on the turning around of that business of the anatomic pathology. Thank you.

Thanks, David.

Thank you. Next question is coming from Liu Li from UBS. Your line is now live.

Good morning. Thank you for taking my questions. I guess, like, the first one, probably sticking to the guide. So 10% in 2025, but you just finished a very good quarter as well. I wonder specifically on precision oncology and diagnostics. You have, like, 20-40% year-over-year growth, but it seems like 2025 will be lower. But you also have, like, two new wins in VA, FMI, and longer. Are we going to see any upside to the guide, or is it more like a timing that will be, like, pushing back to 2026?

Yeah. Paul, you need that one first. Hello, Liu. Can you hear me?

Yeah. I can hear you. Yeah. I can take it. This start with. And hey. And thank you for the question. Look, I think the guide is the number that, well, we feel really good about. It's a number that we have really good visibility into. With that said, we certainly have opportunities and new wins that we've not built into that number only because they're not fully baked. And these are new wins, or we need some time to understand what they may mean to our revenue. You mentioned Foundation Medicine. I mean, that's a great example. Right? Foundation Medicine is a great example. Really excited about the new partnership with Foundation Medicine, but we don't have any Foundation Medicine in the 2025 guide, zero dollars. Why? It's a new win. We just don't know enough about it yet, and we don't have the experience and data to feel comfortable putting a number on that partnership. That said, it's certainly something north of zero dollars. Right? So yes, there could be some potential upside there. So I think as we think about these new wins and partnerships, and as they begin to, you know, produce and we have a better understanding of their run rate and, you know, if they are meaningful, we can certainly, you know, adjust guidance in the following quarters, but I think where we sit today with the clear visibility we have into this number, we feel really good about it.

Got it. Understood. Can you give us a little bit of an update in terms of the VA hospital contract? What have you heard from the physician office? And how much of the revenue do you think will come in 2025?

Yeah. I'm not ready to just kind of disclose how much revenue in 2025 because it's still a little bit early in that launch. I will say it's going extremely well, extremely well. I think we've been pretty conservative with how much VA revenue we've built into the guide for this year. That could possibly be some upside there if it continues to go as well as it has. But so far, we're really pleased with the progress we've made with the VA.

Got it. And then another question going back to the AP. So you mentioned that you spent a lot of new accounts with a very long turnaround time, and that appears to be a good opportunity for you. I wonder how fast you can capture all the accounts, and do you need to keep increasing the sales representatives in order to maintain the momentum? Like, eventually, what will be the optimal size of the sales rep in the AP business?

Yeah. That's a great question. I will say that the sales team is still subscale. I think we have an exceptionally good sales team. And I think we have exceptionally good sales leadership. But it is subscale. Like, our goal is to go capture as much of this market as we can. You know, it does take some time to find good salespeople to train good salespeople. So, I mean, that's why we scaled the team in 2024, and that's why we plan to continue to scale the team in 2025. You know? I think our facility, our AP facility that we built in Coppell, Texas, is absolutely state-of-the-art. It is amazing. It is built from the ground up. Designed from the ground up to be efficient, high capacity. It is just, you know, a really good operation. So our sales team is out there selling that. Right? They're selling our quality. They're selling our turnaround time. We have the capacity. So I think when you bundle an exceptionally well-run pathology lab with great pathologists, with a really good sales team, it's just been a recipe for success. So we want to continue to scale that team. We want to continue to capture more of that market. And that's going to be in the cards for 2025.

Got it. Thank you.

You bet. Thank you. Thank you. Next question is coming from Andrew Cooper from Raymond James. Your line is now live.

Hi, everybody. Thanks for the questions. Maybe just first, you mentioned diagnostics having a being a little bit light of where you had hoped on some slip out of new customer wins into the first quarter of 2025. Can you give a little more context on the size of that and, you know, how that plays out as we think about sort of low double-digit growth in the guide and precision diagnostics, especially in the context of things like the VA and Foundation and Nova launch that presumably could drive additional growth there?

Yeah. Thanks for the question, Andrew. I think you're spot on. I mean, what you mentioned there are potential growth levers that we have not built into this guide. I've already said zero dollars from Foundation Medicine. A modest amount for the VA, a very modest amount for Nova, that's currently built into the guide. So, you know, I don't want to give too much color for competitive reasons on the accounts that have slid a little bit into this quarter from the fourth quarter, but these are just large accounts, Andrew, with lots of locations. In onboarding, lots of doctors, lots of locations. It's just taking us a little bit longer than we thought. It's going well. We have a lot of these locations already onboarded. With a lot left, but the locations that are onboarded are very happy with our turnaround time, quality, and support we're giving them. It's just taking a little bit longer than we had hoped to get every location onboarded for some of these big wins. But it should be happening here pretty soon in the first quarter and maybe a little bit into the second.

Hey, Andrew. If you remember, a year or two ago, the split between anatomic pathology and precision diagnostics, it was about half and half. And, you know, as Brandon has indicated comprehensively, you know, the success of the precision diagnostics has been, you know, absolutely wonderful for the company. You know, when you take a look at how we ended 2024, you know, we posted, you know, and precision diagnostics was $70 million higher than what we achieved in anatomic pathology. So those numbers are large. And when we take a look at 2025, with our initial guide of $310 million, you know, what we're anticipating in precision diagnostics, in each of those quarters, although it might be a low percentage number, it's higher than what we achieved in Q4. The other thing that you also see is the tremendous increase in the gross margins. Right? As a result largely from the growth that we see in precision diagnostics. About a year ago or so, we had our gross margin target at, you know, close to 40%, and we ended the fourth quarter with gross margins, you know, higher than 40%. So, you know, the overall business and what, you know, precision diagnostics is doing for the company, it's very, very important. And, you know, we always reserve the option to increase the guidance as we see more progress and color in some of these programs that Brandon mentioned.

Okay. Super helpful. Maybe shifting gears a little bit to that AP business, you mentioned some of the wins really stemming from the derm side of things. Is that where you had felt a little bit of pain when that business was kind of underperforming a little bit? And I ask that meaning, is this recapture of share that had maybe gone away, or is it, you know, capture of incremental and some of the other parts of the business continue to be maybe a little bit shy of where they had been a few years ago? And what do you need to do if the latter is the case to recapture that and get those other pieces of the business growing better as well?

Yeah. That's a good question. Good question, Andrew. You know, I think we have two dynamics as it relates to our AP business. It's a large, what we call, base book of business. Right? Our existing client. And from the time we acquired the laboratory, our base book of business was going in the wrong direction. Right? So as the sales team would close the deal, we'd lose the base account. It was sort of one step forward, one step back. And we've made a lot of improvements around our account management, our client health score, monitoring it proactively. And I can say in 2024, we did a really good job keeping and maintaining our base book of business. So now it's not one step forward, one step back anymore. The sales team is layering on new wins, and our base book is solid. So now we're growing, and that's how we've taken that business and returned it to growth. I've mentioned derm a couple of times. Yes. I mean, derm was a big factor for us in 2024. But, you know, we've done well in GI. We've done well in GU. We've done well in, you know, breadth in general surgical pathology. I just think overall, it's been a really successful turnaround story. We spoke to a lot of markets out there to capture. Again, our sales team is frankly just scratching the surface of the opportunities. I mean, we can't really scale this team quickly enough, and the reason is we want to take advantage of that state-of-the-art operation we built and the fantastic services we have there. They're great products to sell. So we're trying to scale the sales team as quickly as we can, but I think we've just scratched the surface on the opportunities across the entire AP division.

Yeah. I think adding to Brandon's point, we made a heavy technology investment in that AP business. We're making pretty much the digitization or using advanced technology to make that entire business more efficient. That's what you can see what Brandon mentioned. The other labs have turnaround times of more than two weeks, and we are achieving it in a few days. We like our position, and that's why we see the growth. Instead, we bought the business that was in decline mode. I think we believe we found the bottom and started to find the growth.

Okay. Helpful. And then maybe just one last one. I know you gave the color around the cost of some of the clinical trials in the pharma efforts. How should we think about the overall cash utilization from those efforts in 2025 and potentially beyond if you continue to push that pipeline forward ahead of, you know, any FDA approval or anything like that?

Yeah. That's a very good question. Actually, we left a formal policy, the financial disclosure, we expect the burn rate for that unit for the pharma therapeutic development in the year 2025 to include the R&D and the clinical studies to be around $25 million. So that's a very efficient use of our money and to give up to one of the two of the most critical drugs to treat the patients with not much of the options with the current drugs. So we think we have a very efficient R&D team, and we will see the results in June at ASCO about our findings in the FID-007 in terms of phase two trials, and also we expect to enroll the patients for the FID-022 in the second quarter. We are very excited about this opportunity. We're doing it with a nominal investment, and we do believe it will be rewarded.

Perfect. I will stop there. Thanks, everybody.

Thank you.