Fulgent Genetics Inc

Note Regarding Non-GAAP Financial Measures

Certain information in this proxy statement, including Core Revenue, Core EBITDA, Non-GAAP Gross Margin are non-GAAP financial measures. The Company believes this information is useful to stockholders because it provides a basis for measuring the performance of the Company’s business, excluding certain income or expense items that are not directly attributable to the Company’s operating results. The Company defines Core Revenue as total revenue calculated in accordance with accounting principles generally accepted in the United States of America, or GAAP, minus revenue from COVID-19 testing services calculated in accordance with GAAP. The Company defines Core EBITDA as GAAP income (loss) minus non-GAAP gross profit from COVID-19 testing services, plus or minus interest (expense) income, plus or minus provisions (benefits) for income taxes, plus restructuring costs, plus acquisition-related costs, plus equity-based compensation expenses, plus depreciation and amortization, plus goodwill impairment loss, plus or minus (loss) gain on equity-method investment, and plus or minus other charges or gains, as identified, that management believes are not representative of the Company’s operations. The Company defines non-GAAP gross profit as gross profit calculated in accordance with GAAP plus equity-based compensation included in cost of revenue as shown in the table below. The Company defines non-GAAP gross margin by taking non-GAAP gross profit and dividing it by GAAP revenue. The Company may continue to incur expenses similar to the items added to or subtracted from GAAP income (loss) to calculate Core EBITDA; accordingly, the exclusion of these items in the presentation of these non-GAAP financial measures should not be construed as an implication that these items are unusual, infrequent or non-recurring. Management uses these non-GAAP financial measures along with the most directly comparable GAAP financial measure of net income (loss) in evaluating the Company’s operating performance. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in conformity with GAAP, and non-GAAP financial measures as reported by the Company may not be comparable to similarly titled metrics reported by other companies.

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