Burning Rock Reports First Quarter 2023 Financial Results


GUANGZHOU, China, May 30, 2023 (GLOBE NEWSWIRE) -- 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, 2023.

Recent Business Updates

  • Minimal Residual Disease (MRD)
    • Results of the MEDAL (MEthylation Based Dynamic Analysis for Lung Cancer) study were published at the American Association for Cancer Research Annual Meeting 2023 (“AACR 2023”). Through parallel testing and comparison of Burning Rock’s personalized MRD test brPROPHET™ and fixed MRD assays, the objective of this study was to establish the best technique and application strategy of dynamic MRD detection for prognosis prediction and disease assessment among NSCLC patients. It shows that brPROPHET™ detected more MRD events with ultra-low ctDNA abundance yet meaningful prognostic significance. In addition, the dynamic change of longitudinal MRD was evaluated to explore the positive predictive value (PPV) and negative predictive value (NPV) of MRD detections over time, providing important insights for guiding the standardization of future surveillance applications.
    • The results of the clinical performance of brPROPHET™ in patients with resectable gastric cancer and biliary tract cancer were also released at AACR 2023.
  • Pharma Services
    • Total value of new contracts entered into during the first quarter of 2023 amounted to RMB75 million, representing a 27% increase from the same period in 2022.

First Quarter 2023 Financial Results

Revenues were RMB142.5 million (US$20.8 million) for the three months ended March 31, 2023, representing a 5.2% increase from RMB135.5 million for the same period in 2022.

  • Revenue generated from central laboratory business was RMB61.8 million (US$9.0 million) for the three months ended March 31, 2023, representing a 16.7% decrease from RMB74.2 million for the same period in 2022, primarily attributable to a drop in the number of tests performed resulting from the impact of COVID-19 pandemic in January and the Company’s focus on its in-hospital business.
  • Revenue generated from in-hospital business was RMB51.6 million (US$7.5 million) for the three months ended March 31, 2023, representing a 5.3% increase from RMB49.0 million for the same period in 2022, driven by an increase in sales volume.
  • Revenue generated from pharma research and development services was RMB29.2 million (US$4.3 million) for the three months ended March 31, 2023, representing a 135.5% increase from RMB12.4 million for the same period in 2022, primarily attributable to a further increased testing volume performed and higher average total contract value from our existing and new customers.

Cost of revenues was RMB43.7 million (US$6.4 million) for the three months ended March 31, 2023, representing a 8.8% decrease from RMB47.9 million for the same period in 2022, primarily due to a decrease in cost of central laboratory business, which was in line with the decrease in revenue generated from this business.

Gross profit was RMB98.8 million (US$14.4 million) for the three months ended March 31, 2023, representing a 12.8% increase from RMB87.6 million for the same period in 2022. Gross margin was 69.3% for the three months ended March 31, 2023, compared to 64.6% for the same period in 2022. By channel, gross margin of central laboratory business was 77.8% for the three months ended March 31, 2023, compared to 68.1% during the same period in 2022, primarily due to a decrease in inventory write down and royalty fee; gross margin of in-hospital business was 66.7% for the three months ended March 31, 2023, compared to 68.2% during the same period in 2022; gross margin of pharma research and development services was 55.8% for the three months ended March 31, 2023, compared to 29.2% during the same period of 2022, primarily due to an increase in test volume of higher margin projects.

Non-GAAP gross profit, which excludes depreciation and amortization expenses, was RMB107.9 million (US$15.7 million) for the three months ended March 31, 2023, representing a 16.4% increase from RMB92.7 million for the same period in 2022. Non-GAAP gross margin was 75.7% for the three months ended March 31, 2023, compared to 68.4% for the same period in 2022.

Operating expenses were RMB287.2 million (US$41.8 million) for the three months ended March 31, 2023, representing a 18.0% decrease from RMB350.4 million for the same period in 2022. The decrease was primarily driven by budget control measures and headcount reduction to improve the Company’s operating efficiency.

  • Research and development expenses were RMB94.4 million (US$13.7 million) for the three months ended March 31, 2023, representing an 21.0% decrease from RMB119.5 million for the same period in 2022, primarily due to (i) a decrease in research and development personnel’s staff cost, and (ii) a decrease in royalty and license fee.
  • Selling and marketing expenses were RMB64.8 million (US$9.4 million) for the three months ended March 31, 2023, representing a 27.4% decrease from RMB89.2 million for the same period in 2022, 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 entertainment and travel expenses; and (iii) a decrease in advertising and marketing fee.
  • General and administrative expenses were RMB128.0 million (US$18.6 million) for the three months ended March 31, 2023, representing a 9.7% decrease from RMB141.7 million for the same period in 2022, primarily due to (i) a decrease in general and administrative personnel’s staff cost, and (ii) a decrease in operating lease expense as a portion of the expense started to be recognized as cost of revenue following the commencement of production activities in the relevant parts of the property in the first half of 2022; (iii) a decrease in amortized expense on share-based compensation.

Net loss was RMB185.3 million (US$27.0 million) for the three months ended March 31, 2023, compared to RMB261.4 million for the same period in 2022.

Cash, cash equivalents, restricted cash and short-term investments were RMB803.1 million (US$116.9 million) as of March 31, 2023.

2023 Financial Guidance

We reiterate our 2023 full-year revenue guidance of approximately 20% growth over 2022.

Conference Call Information

Burning Rock will host a conference call to discuss the first quarter 2023 financial results at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Hong Kong time) on May 30, 2023.

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/BI70acdaea8afc4d3e8f3eec70e5cc3fa7.

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/p3h6zb7y.

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.

Selected Operating Data

 For the three months ended
 March 31,
2022
 June 30,
2022
 September 30,
2022
 December 31,
2022
 March 31,
2023
Central Laboratory Channel:         
Number of patients tested7,743 8,060 7,989 6,419 6,139
Number of ordering physicians(1)994 767 897 797 792
Number of ordering hospitals(2)318 264 257 238 241

(1) Represents physicians who on average order at least one test from us every month during a relevant period in the central laboratory channel.
(2) Represents hospitals whose residing physicians who on average order at least one test from us every month during a relevant period in the central laboratory channel.

 As of
 March 31,
2022
 June 30,
2022
 September 30,
2022
 December 31,
2022
 March 31,
2023
In-hospital Channel:         
Pipeline partner hospitals(1)24 25 22 28 29
Contracted partner hospitals(2)41 43 47 49 49
Total number of partner hospitals 65 68 69 77   78

(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,
2022
 June 30,
2022
 September 30,
2022
 December 31,
2022
 March 31,
2023
 
 (RMB in thousands)
Central laboratory channel74,211 78,597 89,992 71,970 61,804 
In-hospital channel48,957 34,177 49,636 42,526 51,561 
Pharma research and development channel12,356 18,072 15,003 27,741 29,151 
Total revenues135,524  130,846  154,631 142,237  142,516 


 For the three months ended 
Gross profit

March 31,
2022
 June 30,
2022
 September 30,
2022
 December 31,
2022
 March 31,
2023
 
 (RMB in thousands)
Central laboratory channel50,574 57,575 69,991 54,507 48,090 
In-hospital channel33,396 20,012 31,593 26,999 34,409 
Pharma research and development channel3,610 5,015 7,010 19,757 16,273 
Total gross profit
87,580  82,602 108,594  101,263  98,772  


 For the three months ended 
Share-based compensation expenses

March 31,
2022
 June 30,
2022
 September 30,
2022
 December 31,
2022
 March 31,
2023
 
 (RMB in thousands)
Cost of revenues365 441 481 496 353 
Research and development expenses12,299 11,923 13,978 14,673 13,612 
Selling and marketing expenses1,774 2,158 2,346 2,247 1,606 
General and administrative expenses65,715 62,615 61,041 74,232 62,595 
Total share-based compensation expenses
80,153 77,137 77,846  91,648  78,166 


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,
2022
   June 30,
2022
   September 30,
2022
 
  December 31,
2022
 
  March 31,
2023
   March 31,
2023
 
   RMB   RMB   RMB   RMB   RMB   US$ 
Revenues  135,524   130,846   154,631   142,237   142,516   20,752 
Cost of revenues  (47,944)  (48,244)  (46,037)  (40,974)  (43,744)  (6,370)
Gross profit  87,580   82,602   108,594   101,263   98,772   14,382 
Operating expenses:                        
Research and development expenses  (119,496)  (92,112)  (109,433)  (100,827)  (94,417)  (13,748)
Selling and marketing expenses  (89,211)  (105,634)  (90,275)  (85,174)  (64,774)  (9,432)
General and administrative expenses  (141,733)  (150,316)  (143,530)  (132,705)  (128,039)  (18,644)
Total operating expenses  (350,440)  (348,062)  (343,238)  (318,706)  (287,230)  (41,824)
Loss from operations  (262,860)  (265,460)  (234,644)  (217,443)  (188,458)  (27,442)
Interest income  1,832   2,685   2,001   2,838   3,144   458 
Interest expenses  119   (29)  12   -   -   - 
Other income (expense), net  298   127   (189)  (84)  599   87 
Foreign exchange (loss) gain, net  (777)  624   1,337   365   (116)  (17)
Loss before income tax  (261,388)  (262,053)  (231,483)  (214,324)  (184,831)  (26,914)
Income tax expenses  -   (84)  -   (1,901)  (422)  (61)
Net loss  (261,388)  (262,137)  (231,483)  (216,225)  (185,253)  (26,975)
Net loss attributable to Burning Rock Biotech Limited’s shareholders  (261,388)  (262,137)  (231,483)  (216,225)  (185,253)  (26,975)
Net loss attributable to ordinary shareholders  (261,388)  (262,137)  (231,483)  (216,225)  (185,253)  (26,975)
Loss per share for class A and class B ordinary shares:                        
Class A ordinary shares - basic and diluted  (2.50)  (2.50)  (2.23)  (2.11)  (1.81)  (0.26)
Class B ordinary shares - basic and diluted  (2.50)  (2.50)  (2.23)  (2.11)  (1.81)  (0.26)
Weighted average shares outstanding used in loss per share computation:                        
Class A ordinary shares - basic and diluted  87,179,752   87,532,539   86,585,322   85,051,882   85,065,585   85,065,585 
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  (3,065)  29,715   20,646   (5,950)  (5,659)  (824)
Total comprehensive loss  (264,453)  (232,422)  (210,837)  (222,175)  (190,912)  (27,799)
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders  (264,453)  (232,422)  (210,837)  (222,175)  (190,912)  (27,799)


Burning Rock Biotech Limited
Unaudited Condensed Consolidated Balance Sheets
(In thousands)
 
  As of
  December 31,
2022
 March 31,
2023
 March 31,
2023
  RMB RMB US$
ASSETS      
Current assets:            
Cash and cash equivalents  905,451   793,484   115,540 
Restricted cash  19,817   9,658   1,406 
Accounts receivable, net  109,954   125,554   18,282 
Contract assets, net  41,757   48,887   7,118 
Inventories, net  130,321   113,895   16,584 
Prepayments and other current assets, net  51,462   47,209   6,874 
Total current assets  1,258,762   1,138,687   165,804 
Non-current assets:            
Equity method investment  690   599   87 
Convertible note receivable  5,105   5,105   743 
Property and equipment, net  251,829   220,342   32,084 
Operating right-of-use assets  48,205   39,351   5,730 
Intangible assets, net  1,986   1,701   248 
Other non-current assets  20,890   11,583   1,687 
Total non-current assets  328,705   278,681   40,579 
TOTAL ASSETS  1,587,467   1,417,368   206,383 


Burning Rock Biotech Limited
Unaudited Condensed Consolidated Balance Sheets (Continued)
(in thousands)
 
  As of
  December 31,
2022
 March 31,
2023
 March 31,
2023
  RMB RMB US$
LIABILITIES AND SHAREHOLDERS’ EQUITY            
Current liabilities:            
Accounts payable  50,947   23,593   3,435 
Deferred revenue  147,633   154,317   22,470 
Accrued liabilities and other current liabilities  173,832   146,697   21,361 
Customer deposits  1,803   1,197   174 
Current portion of operating lease liabilities  37,236   32,312   4,705 
Total current liabilities  411,451   358,116   52,145 
Non-current liabilities:            
Non-current portion of operating lease liabilities  13,551   9,144   1,331 
Other non-current liabilities  4,124   4,545   661 
Total non-current liabilities  17,675   13,689   1,992 
TOTAL LIABILITIES  429,126   371,805   54,137 
Shareholders’ equity:            
Class A ordinary shares  117   117   17 
Class B ordinary shares  21   21   3 
Additional paid-in capital  4,582,790   4,660,924   678,683 
Treasury stock  (58,919)  (58,919)  (8,579)
Accumulated deficits  (3,199,946)  (3,385,199)  (492,923)
Accumulated other comprehensive loss  (165,722)  (171,381)  (24,955)
Total shareholders’ equity  1,158,341   1,045,563   152,246 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  1,587,467   1,417,368   206,383 

  

Burning Rock Biotech Limited
Unaudited Condensed Statements of Cash Flows
(in thousands)
 
 For the three months ended
 March 31,
2022
  March 31,
2023
  March 31,
2023
 RMB   RMB
  US$
Net cash used in operating activities(144,361) (113,143) (16,475)
Net cash used in investing activities(13,011) (4,059) (591)
Net cash used in financing activities(3,934) (32) (5)
Effect of exchange rate on cash, cash equivalents and restricted cash(2,931) (4,892) (712)
Net decrease in cash, cash equivalents and restricted cash (164,237) (122,126) (17,783)
Cash, cash equivalents and restricted cash at the beginning of period1,439,112  925,268  134,729 
Cash, cash equivalents and restricted cash at the end of period1,274,875   803,142   116,946  


Burning Rock Biotech Limited
Reconciliations of GAAP and Non-GAAP Results
 
  For the three months ended
 March 31,
2022
  June 30,
2022
  September 30,
2022
  December 31,
2022
  March 31,
2023
 
  (RMB in thousands)
Gross profit:

  
Central laboratory channel50,574  57,575  69,991  54,507  48,090 
In-hospital channel33,396  20,012  31,593  26,999  34,409 
Pharma research and development channel3,610  5,015  7,010  19,757  16,273 
Total gross profit
87,580   82,602  108,594  101,263  98,772 
Add: depreciation and amortization:      
Central laboratory channel2,553  2,545  3,138  3,609  2,567 
In-hospital channel93  1,428  2,479  2,449  2,582 
Pharma research and development channel2,493  4,327  2,805  3,065  3,974 
Total depreciation and amortization included in cost of revenues
5,139    8,300   8,422   9,123    9,123  
Non-GAAP gross profit:     
Central laboratory channel53,127  60,120  73,129  58,116  50,657 
In-hospital channel33,489  21,440  34,072  29,448  36,991 
Pharma research and development channel6,103  9,342  9,815  22,822  20,247 
Total non-GAAP gross profit 92,719   90,902  117,016  110,386  107,895 
Non-GAAP gross margin:     
Central laboratory channel71.6% 76.5% 81.3% 80.8% 82.0%
In-hospital channel68.4% 62.7% 68.6% 69.2% 71.7%
Pharma research and development channel49.4% 51.7% 65.4% 82.3% 69.5%
Total non-GAAP gross margin68.4% 69.5% 75.7% 77.6% 75.7%

 



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