1st Quarter Results

Source: RNS
RNS Number : 2352Q
Burning Rock Biotech Limited
29 May 2024
 

Burning Rock Reports First Quarter 2024 Financial Results

GUANGZHOU, China, May 29, 2024-Burning Rock Biotech Limited (NASDAQ: BNR and LSE: BNR, the "Company" or "Burning Rock"), a company focused on the application of next generation sequencing (NGS) technology in the field of precision oncology, today reported financial results for the three months ended March 31, 2024.

 

Recent Business Updates

·         Early Detection

THUNDER study for 6-cancer test was included in the Diagnosis and Treatment Guidelines for Primary Liver Cancer (2024 Edition) and the Expert Consensus on Detection and Clinical Application of Tumor DNA Methylation Markers (2024 Edition), showing an impressive performance of ELSA-seq using cfDNA in cancer detection and origin prediction.

·         Pharma Services

Total value of new contracts during the first quarter of 2024 amounted to RMB218 million, representing a growth over 100% from the same period in 2023.

 

First Quarter 2024 Financial Results

Total Revenues were RMB125.6 million (US$17.4 million) for the three months ended March 31, 2024, representing a 11.9% decrease from RMB142.5 million for the same period in 2023, as we transition from central-lab to more in-hospital based testing. Importantly, in-hospital segment continued its double-digit growth.

·      Revenue generated from in-hospital business was RMB57.4 million (US$7.9 million) for the three months ended March 31, 2024, representing a 11.3% increase from RMB51.6 million for the same period in 2023, driven by an increase in sales volume.

·     Revenue generated from central laboratory business was RMB47.6 million (US$6.6 million) for the three months ended March 31, 2024, representing a 23.0% decrease from RMB61.8 million for the same period in 2023, primarily attributable to a decrease in the number of tests, as we continued our transition towards  in-hospital testing.

·      Revenue generated from pharma research and development services was RMB20.6 million (US$2.9 million) for the three months ended March 31, 2024, representing a 29.3% decrease from RMB29.2 million for the same period in 2023, primarily attributable to decreased testing services performed for our pharma customers due to timing of lumpy projects.

Cost of revenues was RMB39.9 million (US$5.5 million) for the three months ended March 31, 2024, representing an 8.7% decrease from RMB43.7 million for the same period in 2023, primarily due to a decrease in cost of central laboratory business, which was in line with the decrease in revenue generated from this business and partially offset by an increase in sales volume of in-hospital business and a decrease in depreciation expense for all kinds of business.

Gross profit was RMB85.7 million (US$11.9 million) for the three months ended March 31, 2024, representing a 13.2% decrease from RMB98.8 million for the same period in 2023. Gross margin was 68.2% for the three months ended March 31, 2024, compared to 69.3% for the same period in 2023. By channel, gross margin of central laboratory business was 77.7% for the three months ended March 31, 2024, compared to 77.8% during the same period in 2023; gross margin of in-hospital business was 68.3% for the three months ended March 31, 2024, compared to 66.7% during the same period in 2023, primarily due to a decrease in amortization; gross margin of pharma research and development services was 46.1% for the three months ended March 31, 2024, compared to 55.8% during the same period of 2023.

Non-GAAP gross profit, which excludes depreciation and amortization expenses, was RMB93.0 million (US$12.9 million) for the three months ended March 31, 2024, representing a 13.8% decrease from RMB107.9 million for the same period in 2023. Non-GAAP gross margin was 74.0% for the three months ended March 31, 2024, compared to 75.7% for the same period in 2023.

Operating expenses were RMB211.5 million (US$29.3 million) for the three months ended March 31, 2024, representing a 26.4% decrease from RMB287.2 million for the same period in 2023. The decrease was primarily driven by improved operating efficiency.

·         Research and development expenses were RMB66.0 million (US$9.1 million) for the three months ended March 31, 2024, representing a 30.1% decrease from RMB94.4 million for the same period in 2023, primarily due to (i) a decrease in staff cost resulted from the reorganization of our research and development department to improve operating efficiency, and (ii) a decrease in the expenditure for  research projects.

·         Selling and marketing expenses were RMB46.9 million (US$6.5 million) for the three months ended March 31, 2024, representing a 27.7% decrease from RMB64.8 million for the same period in 2023, primarily due to (i) a decrease in staff cost resulted from the reorganization of the sales department and improvement in operating efficiency; (ii) a decrease in conference fee; and (iii) a decrease in travel expense.

·         General and administrative expenses were RMB98.7 million (US$13.7 million) for the three months ended March 31, 2024, representing a 22.9% decrease from RMB128.0 million for the same period in 2023, primarily due to (i) a decrease in general and administrative personnel's staff cost, and (ii) a decrease in amortized expenses for office building; (iii) a decrease in the provision for allowance for doubtful accounts.

Net loss was RMB121.5 million (US$16.8 million) for the three months ended March 31, 2024, compared to RMB185.3 million for the same period in 2023.

Cash, cash equivalents, restricted cash and short-term investments were RMB572.7 million (US$79.3 million) as of March 31, 2024.

 

2024 Financial Guidance

We currently expect to achieve breakeven (measured by non-GAAP gross profit minus non-GAAP SG&A) for the full year 2024.

Non-GAAP gross profit refers to gross profit excluding depreciation and amortization. Non-GAAP SG&A refers to selling and marketing expenses and general and administrative expenses, both excluding their respective share-based compensation and depreciation and amortization.

 

Corporate structure reorganization

The Company moved its PRC onshore headquarter from Beijing to Guangzhou in May 2024. Burning Rock Biotech Limited, our ultimate Cayman Islands holding company, does not have any substantive operations other than directly controlling Guangzhou Burning Rock Biotech Limited, our new wholly foreign owned entity, or WFOE, and indirectly controlling Burning Rock (Beijing) Biotechnology Co., Ltd., the variable interest entity, or VIE, through certain contractual arrangements. The equity change of Beijing Burning Rock Biotech Limited had been completed, and certain contractual agreements had been amended. The chart below sets forth our corporate structure and identifies our principal subsidiaries as of the date of this release:

 

Conference Call Information

Burning Rock will host a conference call to discuss the first quarter 2024 financial results at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Hong Kong time) on May 29, 2024.

Please register in advance of the conference using the link provided below and dial in 15 minutes prior to the call, using participant dial-in numbers and unique registrant ID which would be provided upon registering.

PRE-REGISTER LINK: https://register.vevent.com/register/BIbdb6210ab73d4bb7b25e3ffbdc206d07.

Additionally, a live and archived webcast of the conference call will also be available on the company's investor relations website at http://ir.brbiotech.com or through link  https://edge.media-server.com/mmc/p/ovj2q2n6.

A replay of the webcast will be available for 12 months via the same link above.

 

About Burning Rock

Burning Rock Biotech Limited (NASDAQ: BNR and LSE: BNR), whose mission is to guard life via science, focuses on the application of next generation sequencing (NGS) technology in the field of precision oncology. Its business consists of i) NGS-based therapy selection testing for late-stage cancer patients, and ii) cancer early detection, which has moved beyond proof-of-concept R&D into the clinical validation stage.

For more information about Burning Rock, please visit: ir.brbiotech.com.

 

Safe Harbor Statement

This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates," "target," "confident" and similar statements. Burning Rock may also make written or oral forward-looking statements in its periodic reports to the SEC, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about Burning Rock's beliefs and expectations, are forward-looking statements. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond Burning Rock's control. Forward-looking statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those contained in any such statements. All information provided in this press release is as of the date of this press release, and Burning Rock does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.

 

Non-GAAP Measures

In evaluating the business, the Company considers and uses non-GAAP measures, such as non-GAAP gross profit and non-GAAP gross margin, as supplemental measures to review and assess operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP"). The company defines non-GAAP gross profit as gross profit excluding depreciation and amortization. The company defines non-GAAP gross margin as gross margin excluding depreciation and amortization.

The company presents these non-GAAP financial measures because they are used by management to evaluate operating performance and formulate business plans. The company believe non-GAAP gross profit and non-GAAP gross margin excluding non-cash impact of depreciation and amortization reflect the company's ongoing business operations in a manner that allows more meaningful period-to-period comparisons.

 

Contact: IR@brbiotech.com

Selected Operating Data

 

 


 


As of


March 31, 2023

June 30, 2023

September 30, 2023

December 31, 2023

March 31, 2024

In-hospital Channel:

 

 

 

 

 

Pipeline partner hospitals(1)

 29

 30

 29

 28

 28

Contracted partner hospitals(2)

 49

 50

 55

 59

 59

Total number of partner hospitals 

 78

 80

 84


 87


 87


(1) 

Refers to hospitals that are in the process of establishing in-hospital laboratories, laboratory equipment procurement or installation, staff training or pilot testing using the Company's products.

(2)

Refers to hospitals that have entered into contracts to purchase the Company's products for use on a recurring basis in their respective in-hospital laboratories the Company helped them establish. Kit revenue is generated from contracted hospitals.

 



 

 

Selected Financial Data


For the three months ended

 

Revenues

 

 

March 31, 2023

June 30, 2023

September 30, 2023

December 31, 2023

March 31, 2024

 


(RMB in thousands)

Central laboratory channel

61,804

66,239

53,481

  51,288 

47,614

 

In-hospital channel

51,561

53,835

54,496 

28,809

 

57,387

 

Pharma research and development channel

29,151

26,194

19,589

  40,988 

20,622

 

Total revenues

 142,516

146,268

 

127,566

 

  121,085 

125,623

 

 

 


For the three months ended

 

Gross profit

 

March 31, 2023

June 30, 2023

September 30, 2023

December 31, 2023

March 31, 2024

 


(RMB in thousands)

Central laboratory channel

48,090

51,876

41,487

41,886

 

37,002

 

In-hospital channel

34,409

   33,353

  35,459

12,910 

 

 

39,192

 

Pharma research and development channel

16,273

15,193

8,974 

23,317

 

9,500

 

Total gross profit

 

98,772

100,422

85,920  

   78,113  

85,694

 

 

 


For the three months ended

 

Share-based compensation expenses

 

March 31,

2023

June 30,

2023

September 30,

2023

December 31,

2023

March 31, 2024

 


(RMB in thousands)

Cost of revenues

 353

 627

  680 

654

 

596

 

Research and development expenses

13,612

 15,301

  12,161 

  12,401 

12,287

 

Selling and marketing expenses

 1,606

 3,389

  2,848 

  1,816 

508

 

General and administrative expenses

62,595

 18,502

  57,704 

  56,472 

55,990

 

Total share-based compensation expenses

 

78,166

 37,819

  73,393 

  71,343 

69,381

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

Burning Rock Biotech Limited

Unaudited Condensed Statements of Comprehensive Loss

 (in thousands, except for number of shares and per share data)

 


For the three months ended


March 31,

2023

June 30,

2023

September 30, 2023

December 31,2023

March 31, 2024

March 31, 2024


RMB

RMB

RMB

RMB

RMB

US$

Revenues

142,516

146,268

127,566 

121,085 

125,623

17,399

 

Cost of revenues

(43,744)

(45,846)

(41,646)

(42,972)

(39,929)

(5,531)

 

Gross profit

98,772

100,422

  85,920 

78,113 

85,694

11,868

 

Operating expenses:


 

 




 

Research and development expenses

(94,417)

 (95,779)

  (83,701)

 (73,119)

(65,985)

(9,139)

 

Selling and marketing expenses

(64,774)

 (70,842)

  (62,310)

 (49,785)

(46,856)

(6,489)

 

General and administrative expenses

(128,039)

 (69,525)

 (118,724)

 (121,533)

(98,681)

(13,667)

 

Total operating expenses

  (287,230)

  (236,146)

  (264,735)

  (244,437)

(211,522)

(29,295)

 

Loss from operations 

(188,458)

(135,724)

(178,815)

(166,324)

(125,828)

(17,427)

 

Interest income

   3,144

5,255

  4,018 

 5,539

4,038

559

 

Other income (expense), net

    599

(118)

 (157)

 160

434

60

 

Foreign exchange (loss) gain, net

   (116)

 210)

 423

 (517)

(13)

(2)

 

Loss before income tax

(184,831)

(130,797)

 (174,531)

(161,142)

(121,369)

(16,810)

 

Income tax expenses

     (422)

     (445)

     (450)

    (1,071)

(180)

(25)

 

Net loss

  (185,253)

  (131,242)  

  (174,981)

  (162,213)

(121,549)

(16,835)

 

Net loss attributable to Burning Rock Biotech Limited's shareholders

(185,253)

(131,242)

(174,981)

(162,213)

(121,549)

(16,835)

 

Net loss attributable to ordinary shareholders

(185,253)

(131,242)

(174,981)

(162,213)

(121,549)

(16,835)

 

Loss per share for class A and class B ordinary shares:

 

 

 

 

 

 

 

Class A ordinary shares - basic and diluted

(1.81)

(1.28)

(1.71)

(1.58)

(1.19)

(0.16)

 

Class B ordinary shares - basic and diluted

(1.81)

(1.28)

  (1.71)

(1.58)

(1.19)

(0.16)

 

Weighted average shares outstanding used in loss per share computation:

 

 

 


 


 

Class A ordinary shares - basic and diluted

85,065,585

85,151,052

    85,000,869 

85,071,360

85,219,188

85,219,188

 

Class B ordinary shares - basic and diluted

17,324,848

17,324,848

   17,324,848

17,324,848

17,324,848

17,324,848

 

Other comprehensive income (loss), net of tax of nil:


 

 

 

 


 

Foreign currency translation adjustments

(5,659)

14,829

   (1,955)

(3,026)

590

82

 

Total comprehensive loss

(190,912)

(116,413)

  (176,936)

(165,239)

(120,959)

(16,753)

 

Total comprehensive loss attributable to Burning Rock Biotech Limited's shareholders

(190,912)

(116,413)

  (176,936)

(165,239)

(120,959)

(16,753)

 















Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets

(In thousands)

 

As of


December 31, 2023

March 31, 

2024

March 31, 

2024


RMB

RMB

US$

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

 615,096

572,616

79,306

Restricted cash

 120

58

8

Accounts receivable, net

 126,858

135,360

18,747

Contract assets, net

22,748 

23,063

3,194

Inventories, net

 69,020

63,121

8,742

Prepayments and other current assets, net

 50,254

46,630

6,458

Total current assets

 884,096

840,848

116,455

Non-current assets:




Equity method investment

 337

249

34

Convertible note receivable

 5,320

5,320

737

Property and equipment, net

 131,912

114,498

15,858

Operating right-of-use assets

 12,284

19,655

2,722

Intangible assets, net

 964

747

103

Other non-current assets

 5,088

3,609

500

Total non-current assets

 155,905

144,078

19,954

TOTAL ASSETS 

 1,040,001

984,926

136,409

 



 

Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets (Continued)

(in thousands)

 

As of


December 31, 2023

March 31,

2024

March 31,

2024


RMB

RMB

US$

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

Current liabilities:

 

 

 

Accounts payable

 18,061

24,630

3,411

Deferred revenue

 130,537

127,516

17,661

Accrued liabilities and other current liabilities

 104,935

91,037

12,608

Customer deposits

 1,197

1,197

166

Current portion of operating lease liabilities

 8,634

11,026

1,527

Total current liabilities

 263,364

255,406

35,373

Non-current liabilities:

 



Non-current portion of operating lease liabilities

 3,690

7,971

1,104

Other non-current liabilities

 4,537

4,717

651

Total non-current liabilities

 8,227

12,688

1,755

TOTAL LIABILITIES

 271,591

268,094

37,128

 

Shareholders' equity:

 



Class A ordinary shares

116

116

16

Class B ordinary shares

21

21

3

Additional paid-in capital

4,849,337

4,918,718

681,235

Treasury stock

(65,896)

(65,896)

(9,126)

Accumulated deficits

(3,853,635)

(3,975,184)

(550,557)

Accumulated other comprehensive loss

(161,533)

(160,943)

(22,290)

Total shareholders' equity

768,410

716,832

99,281

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

1,040,001

984,926

136,409

 

 

 



 

Burning Rock Biotech Limited

Unaudited Condensed Statements of Cash Flows

(in thousands)

 

For the three months ended


March 31, 2023

March 31, 2024

March 31, 2024


RMB

RMB

US$

Net cash used in operating activities

(113,143)

(40,209)

(5,569)

Net cash used in investing activities

(4,059)

(2,386)

(330)

Net cash used in financing activities

(32)

-

-

Effect of exchange rate on cash, cash equivalents and restricted cash

(4,892)

53

7

Net decrease in cash, cash equivalents and restricted cash

(122,126)

(42,542)

(5,892)

Cash, cash equivalents and restricted cash at the beginning of period

925,268

615,216

85,206

Cash, cash equivalents and restricted cash at the end of period

803,142

572,674

79,314

 

 

 

 






 

 

 

 



 

Burning Rock Biotech Limited

Reconciliations of GAAP and Non-GAAP Results

 


 

For the three months ended

 

 

March 31,

2023

June 30,

2023

September 30, 2023

December 31,

2023

March 31, 2024


 

(RMB in thousands)

Gross profit:

 

 

 

Central laboratory channel

48,090

51,876

41,487

41,886

37,002

In-hospital channel

34,409

33,353

35,459

 12,910

39,192

Pharma research and development channel

16,273

15,193

8,974

23,317

9,500

Total gross profit

 

98,772

100,422

85,920

78,113

85,694

Add: depreciation and amortization:

 

 

 

 

 

Central laboratory channel

 2,567

 2,645

  2,550 

 2,414

1,919

In-hospital channel

 2,582

 2,637

  2,751 

 2,728

1,524

Pharma research and development channel

 3,974

 3,665

  3,863 

 3,808

3,856

Total depreciation and amortization included in cost of revenues

 

 9,123

 8,947

  9,164 

8,950 

7,299

Non-GAAP gross profit

 

 

 

 

 

Central laboratory channel

 50,657

 54,521

  44,037 

 44,300

38,921

In-hospital channel

 36,991

 35,990

  38,210 

15,638  

40,716

Pharma research and development channel

 20,247

 18,858

  12,837 

 27,125

13,356

Total non-GAAP gross profit

107,895

109,369

 

95,084 

 

87,063   

92,993

Non-GAAP gross margin

 

 

 

 

 

Central laboratory channel

82.0%

82.3%

82.3%

86.4%

81.7%

In-hospital channel

71.7%

66.9%

70.1%

54.3%

70.9%

Pharma research and development channel

69.5%

72.0%

65.5%

66.2%

64.8%

Total non-GAAP gross margin

75.7%

74.8%

74.5%

71.9%

74.0%

 

 

 

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