Fulgent Genetics, Inc. Stock Compensation Disclosure
Note 10. Equity-Based Compensation
The Company has included equity-based compensation expense as part of cost of revenue and operating expenses in the accompanying Consolidated Statements of Operations as follows:
|
|
Year Ended December 31, |
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|||||||||
|
|
2025 |
|
|
2024 |
|
|
2023 |
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|||
|
|
(in thousands) |
|
|||||||||
Cost of revenue |
|
$ |
6,827 |
|
|
$ |
7,799 |
|
|
$ |
9,749 |
|
Research and development |
|
|
13,231 |
|
|
|
14,971 |
|
|
|
14,873 |
|
Selling and marketing |
|
|
3,016 |
|
|
|
3,907 |
|
|
|
4,964 |
|
General and administrative |
|
|
16,508 |
|
|
|
17,804 |
|
|
|
13,336 |
|
Total |
|
$ |
39,582 |
|
|
$ |
44,481 |
|
|
$ |
42,922 |
|
The actual tax expense realized from tax deductions related to awards vested or exercised were $3.5 million, $3.4 million and $2.7 million for the years ended December 31, 2025, 2024, and 2023, respectively.
Award Activity
Option Awards
The following table summarizes activity for options to acquire shares of the Company’s common stock in the years ended December 31, 2025, 2024, and 2023:
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Number |
|
|
Weighted- |
|
|
Weighted- |
|
|
Weighted- |
|
|
Aggregate |
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|||||
Balance at December 31, 2022 |
|
|
212 |
|
|
$ |
4.21 |
|
|
|
|
|
|
3.7 |
|
|
$ |
5,420 |
|
|
Granted |
|
|
20 |
|
|
$ |
33.14 |
|
|
$ |
24.85 |
|
|
|
|
|
|
|
||
Exercised |
|
|
(9 |
) |
|
$ |
0.38 |
|
|
$ |
10.76 |
|
|
|
|
|
|
|
||
Canceled |
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
||
Balance at December 31, 2023 |
|
|
223 |
|
|
$ |
6.96 |
|
|
|
|
|
|
3.3 |
|
|
$ |
4,906 |
|
|
Granted |
|
|
5 |
|
|
$ |
22.50 |
|
|
$ |
16.42 |
|
|
|
|
|
|
|
||
Exercised |
|
|
(133 |
) |
|
$ |
0.38 |
|
|
$ |
2.58 |
|
|
|
|
|
|
|
||
Canceled |
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
||
Balance at December 31, 2024 |
|
|
95 |
|
|
$ |
17.07 |
|
|
|
|
|
|
4.7 |
|
|
$ |
134 |
|
|
Granted |
|
|
6 |
|
|
$ |
20.04 |
|
|
$ |
14.26 |
|
|
|
|
|
|
|
||
Exercised |
|
|
(2 |
) |
|
$ |
0.38 |
|
|
$ |
4.24 |
|
|
|
|
|
|
|
||
Canceled |
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
|
|
|
|
||
Balance at December 31, 2025 |
|
|
99 |
|
|
$ |
17.68 |
|
|
|
|
|
|
6.2 |
|
|
$ |
852 |
|
|
Exercisable as of December 31, 2025 |
|
|
81 |
|
|
$ |
14.98 |
|
|
|
|
|
|
3.3 |
|
|
|
|
||
The total fair value of options that vested during the years ended December 31, 2025, 2024, and 2023 was $0.3 million, $0.3 million and $0.2 million, respectively. As of December 31, 2025, the remaining unrecognized compensation expense related to all outstanding option awards was $0.3 million and is expected to be recognized over a weighted-average period of 1.8 years.
RSU Awards
RSUs are awards that entitle the holder to receive shares of the Company’s common stock upon satisfaction of vesting conditions. Each RSU represents the contingent right to receive one share of the Company’s common stock upon vesting and settlement.
The following table summarizes activity for RSUs relating to shares of the Company’s common stock in the years ended December 31, 2025, 2024, and 2023:
|
|
Number of |
|
|
Weighted-Average |
|
||
Balance at December 31, 2022 |
|
|
2,631 |
|
|
$ |
47.76 |
|
Granted |
|
|
853 |
|
|
$ |
34.38 |
|
Vested and settled |
|
|
(1,066 |
) |
|
$ |
43.84 |
|
Forfeited |
|
|
(208 |
) |
|
$ |
54.72 |
|
Balance at December 31, 2023 |
|
|
2,210 |
|
|
$ |
43.84 |
|
Granted |
|
|
1,142 |
|
|
$ |
23.47 |
|
Vested and settled |
|
|
(1,004 |
) |
|
$ |
43.66 |
|
Forfeited |
|
|
(142 |
) |
|
$ |
37.39 |
|
Balance at December 31, 2024 |
|
|
2,206 |
|
|
$ |
33.85 |
|
Granted |
|
|
1,166 |
|
|
$ |
23.08 |
|
Vested and settled |
|
|
(1,049 |
) |
|
$ |
43.66 |
|
Forfeited |
|
|
(90 |
) |
|
$ |
37.39 |
|
Balance at December 31, 2025 |
|
|
2,233 |
|
|
$ |
33.85 |
|
The RSU awards granted in the years ended December 31, 2025, 2024, and 2023 will result in aggregate equity-based compensation expense of $26.7 million, $26.9 million and $29.3 million, respectively, to be recognized over the vesting periods from the vesting commencement date of each award granted in the period. As of December 31, 2025, the remaining unrecognized compensation expense related to all outstanding RSU awards was $43.0 million and is expected to be recognized over a weighted-average period of 2.2 years.
Fair Value Assumptions for Option Awards
The Company uses the Black-Scholes option-pricing model to measure the fair value of option awards. The Black-Scholes option-pricing model requires the input of various assumptions, each of which is subjective and requires significant judgment. These assumptions include the following:
Awards to Employees
The table below sets forth the weighted-average assumptions used in the Black-Scholes option-pricing model to estimate the fair value of options to acquire shares of the Company’s common stock granted to employees during the years ended December 31, 2025, 2024, and 2023.
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Year Ended December 31, |
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|
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2025 |
|
|
2024 |
|
|
2023 |
|
|||
Expected term (in years) |
|
|
6.1 |
|
|
|
6.1 |
|
|
|
6.1 |
|
Risk-free interest rates |
|
|
4.1 |
% |
|
|
4.3 |
% |
|
|
3.8 |
% |
Dividend yield |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Expected volatility |
|
|
79.1 |
% |
|
|
82.2 |
% |
|
|
87.3 |
% |
Determination of Fair Value on Grant Dates and Shares Reserved
The fair value of the shares of the Company’s common stock underlying option and RSU awards is determined by the Company’s board of directors or the compensation committee thereof based on the closing sales price of the Company’s common stock on the date of grant as reported by the Nasdaq Global Market.
The Company reserved for issuance 8.9 million shares of its common stock for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, RSUs, dividend equivalent rights and other stock and cash-based awards under the Company’s Amended and Restated 2016 Omnibus Incentive Plan, plus another 0.7 million shares of its common stock that will be available for issuance solely pursuant to the converted Fulgent, LLC awards. The options must be exercised no later than the expiration date set forth in the notice.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 8, 2021 | |
| 2019 | Mar 13, 2020 | |
| 2017 | Mar 20, 2018 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.