Burning Rock Reports First Quarter 2022 Financial Results

Guangzhou, CHINA


GUANGZHOU, China, May 31, 2022 (GLOBE NEWSWIRE) -- Burning Rock Biotech Limited (NASDAQ: 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, 2022.

Recent Business Updates

  • Therapy Selection and Minimal Residual Disease (MRD)
    • Continued growth through (i) market share gain through continued focus on the in-hospital segment and (ii) new product launch. Achieved 42% overall testing volume growth year-on-year during the first quarter of 2022, driven by the 83% testing volume growth of in-hospital segment year-on-year during the same period, while the testing volume of central laboratory segment grew 0.3% year-on-year. New products’ sales contributed 7% of the central laboratory segmental revenues for March 2022;
      • Burning Rock Liquid Biopsy Conference was successfully held in April 2022. The 2-day online session was chaired by Professor Jia Fan, Jinming Yu and Xu Zhang, with participation from over 140 oncologists, during which the Consensus on NGS Clinical Report Interpretation was released;
      • MRD data was released at American Association for Cancer Research (AACR) Annual Meeting 2022 for non-small cell lung cancer (NSCLC) and colorectal cancer (CRC);
      • MRD product was commercially launched in March 2022.
  • Early Detection  
    • Data release at AACR on analytical validation;
    • Commercialization in progress, with a few hospitals having completed product on-boarding and generating revenues.
  • Pharma Services
    • Continued revenue growth, with 302.7% revenue growth year-on-year during the first quarter of 2022. Pharma service contract backlog continues to build rapidly. The total value of new contracts we entered into during the first quarter of 2022 amounted to RMB59 million, representing approximately 125% increase from the first quarter of 2021.

First Quarter 2022 Financial Results

Revenues were RMB135.5 million (US$21.4 million) for the three months ended March 31, 2022, representing a 27.1% increase from RMB106.6 million for the same period in 2021.

  • Revenue generated from central laboratory business was RMB74.2 million (US$11.7 million) for the three months ended March 31, 2022, representing a 0.5% decrease from RMB74.6 million for the same period in 2021.
  • Revenue generated from in-hospital business was RMB49.0 million (US$7.7 million) for the three months ended March 31, 2022, representing a 68.9% increase from RMB29.0 million for the same period in 2021, driven by in-hospital testing volume growth.
  • Revenue generated from pharma research and development services was RMB12.4 million (US$1.9 million) for the three months ended March 31, 2022, representing a 302.7% increase from RMB3.1 million for the same period in 2021, primarily attributable to increased testing performed for our pharma customers.

Cost of revenues was RMB47.9 million (US$7.6 million) for the three months ended March 31, 2022, representing a 61.5% increase from RMB29.7 million for the same period in 2021, primarily due to the Company’s continued business growth, increased depreciation in relation to our new laboratory and inventory write downs.

Gross profit was RMB87.6 million (US$13.8 million) for the three months ended March 31, 2022, representing a 13.8% increase from RMB76.9 million for the same period in 2021. Gross margin was 64.6% for the three months ended March 31, 2022, which decreased from 72.2% for the same period in 2021 primarily due to the increased depreciation in relation to our new laboratory and inventory write downs.

Non-GAAP gross profit, which excludes depreciation and amortization, was RMB92.7 million (US$14.6 million) for the three months ended March 31, 2022, representing a 20.2% increase from RMB77.1 million for the same period in 2021. Non-GAAP gross margin was 68.4% for the three months ended March 31, 2022, compared to 72.4% for the same period in 2021 primarily due to an increase of RMB4.8 million in inventory write downs (which resulted in a 3.5 percentage-point decrease of gross margin).

Operating expenses were RMB350.4 million (US$55.3 million) for the three months ended March 31, 2022, representing a 40.9% increase from RMB248.8 million for the same period in 2021. The increase was primarily driven by headcount growth to support our business expansion.

  • Research and development expenses were RMB119.5 million (US$18.9 million) for the three months ended March 31, 2022, representing a 54.4% increase from RMB77.4 million for the same period in 2021, primarily due to (i) an increase in research and development staff cost which resulted from an increase in headcount and (ii) and increase in costs for certain research and development for early detection.
  • Selling and marketing expenses were RMB89.2 million (US$14.1 million) for the three months ended March 31, 2022, representing a 61.8% increase from RMB55.1 million for the same period in 2021, primarily due to an increase in staff cost resulted from increase in headcount to strengthen our commercial presence in the therapy selection business and build up our early detection commercialization team.
  • General and administrative expenses were RMB141.7 million (US$22.4 million) for the three months ended March 31, 2022, representing a 21.9% increase from RMB116.3 million for the same period in 2021, primarily due to an increase in general and administrative personnel’s staff cost resulted from an increase in headcount.

Net loss was RMB261.4 million (US$41.2 million) for the three months ended March 31, 2022, compared to RMB171.4 million for the same period in 2021.

Cash, cash equivalents, restricted cash and short-term investments were RMB1,502.9 million and RMB1,338.4 million (US$211.1 million) as of December 31, 2021 and March 31, 2022, respectively.

2022 Financial Guidance

Given the strong first quarter business performance and assuming that the impact of COVID-19 dissipates over time in China, Burning Rock reiterates its full year 2022 revenue guidance of approximately RMB620 million (US$97.8 million), implying a 22% growth over full year 2021.

Conference Call Information

Burning Rock will host a conference call to discuss the first quarter 2022 financial results at 8:30 a.m. U.S. Eastern Time (8:30 p.m. Hong Kong time) on May 31, 2022.

Details of the conference call are as follows:

International:+65 67135640
U.S.:+1 3322089718
U.K.:+44 2036928124
Hong Kong:+852 30186768
China Mobile:4008209615
China Landline:8008207535
Conference ID:8942518

A replay of the conference call will be available for one week (dial-in number: +61 2 8199 0299; same conference ID as shown above).

About Burning Rock

Burning Rock Biotech Limited (NASDAQ: 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,
2021
 June 30,
2021
 September 30,
2021
 December 31,
2021
 March 31,
2022
Central Laboratory Channel: 
Number of patients tested7,716 8,155
1,013
300
 7,808 8,235 7,743
Number of ordering physicians(1)1,082 1,013 920 917 994
Number of ordering hospitals(2)303 300 287 306 318

(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,
2021
 June 30,
2021
 September 30,
2021
 December 31,
2021
 March 31,
2022
In-hospital Channel: 
Pipeline partner hospitals(1)22 22 24 23 24
Contracted partner hospitals(2)32 34 34 41 41
Total number of partnerhospitals54 56 58 64 65

(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,
2021
 June 30,
2021
 September 30,
2021
 December 31,
2021
 March 31,
2022
 (RMB in thousands)
Central laboratory channel74,561 79,999 78,817 85,976 74,211
In-hospital channel28,994 40,502 43,714 51,906 48,957
Pharma research and development channel3,068 6,778 4,084 9,463 12,356
Total revenues106,623 127,279 126,615 147,345 135,524


 For the three months ended
Gross profit

March 31,
2021
 June 30,
2021
 September 30,
2021
 December 31,
2021
 March 31,
2022
 (RMB in thousands)
Central laboratory channel55,212 58,681 58,387 65,985 50,574
In-hospital channel20,070 29,426 31,111 34,194 33,396
Pharma research and development channel1,658 2,124 2,098 5,200 3,610
Total gross profit

76,940 90,231 91,596 105,379 87,580


 For the three months ended
Share-based compensation expenses

March 31,
2021
 June 30,
2021
 September 30,
2021
 December 31,
2021
 March 31,
2022
 (RMB in thousands)
Cost of revenues339 406 267  492  365
Research and development expenses22,404 20,825 (9,559) (4,033) 12,299
Selling and marketing expenses2,633 2,809 2,044  2,126  1,774
General and administrative expenses59,382 59,369 60,803  62,126  65,715
Total share-based compensation expenses
84,758 83,409 53,555  60,711  80,153


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,
2021
 June 30,
2021
 September 30,
2021
 December 31,
2021

 March 31,
2022
 March 31,
2022

 
 RMBRMBRMBRMBRMBUS$
Revenues106,623  127,279  126,615  147,345  135,524  21,379 
Cost of revenues(29,683) (37,048) (35,019) (41,966) (47,944) (7,563)
Gross profit76,940  90,231  91,596  105,379  87,580  13,816 
Operating expenses:      
Research and development expenses(77,414) (108,071) (69,649) (112,724) (119,496) (18,850)
Selling and marketing expenses(55,130) (68,058) (76,687) (103,221) (89,211) (14,073)
General and administrative expenses(116,259) (116,130) (116,304) (141,563) (141,733) (22,358)
Total operating expenses(248,803) (292,259) (262,640) (357,508) (350,440) (55,281)
Loss from operations(171,863) (202,028) (171,044) (252,129) (262,860) (41,465)
Interest income787  681  958  1,031  1,832  289 
Interest expenses(510) (565) (367) (94) 119  19 
Other income (expense), net118  433  20  (372) 298  47 
Foreign exchange gain (loss), net57  (560) 380  (731) (777) (123)
Loss before income tax(171,411) (202,039) (170,053) (252,295) (261,388) (41,233)
Income tax (benefits) expenses-  (1,626) (424) 1,151  -  - 
Net loss(171,411) (203,665) (170,477) (251,144) (261,388) (41,233)
Net loss attributable to Burning Rock Biotech Limited’s shareholders(171,411) (203,665) (170,477) (251,144) 

(261,388


)
 

(41,233


)
Net loss attributable to ordinary shareholders(171,411) (203,665) (170,477) (251,144) (261,388) (41,233)
Loss per share for class A and class B ordinary shares:      
Class A ordinary shares - basic and diluted(1.65) (1.96) (1.64) (2.40) (2.50) (0.39)
Class B ordinary shares - basic and diluted(1.65) (1.96) (1.64) (2.40) (2.50) (0.39)
Weighted average shares outstanding used in loss per share computation:      
Class A ordinary shares - basic and diluted86,721,263  86,764,260  86,908,975  87,128,297  87,179,752  87,179,752 
Class B ordinary shares - basic and diluted17,324,848  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 adjustments14,080  (34,980) 6,146  (24,726) (3,065) (483)
Total comprehensive loss(157,331) (238,645) (164,331) (275,870) (264,453) (41,716)
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders(157,331) (238,645) (164,331) (275,870) (264,453) (41,716)


Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets

(In thousands)
 
 As of
 December 31,
2021
 March 31,
2022
 March 31,
2022
 RMB RMB US$
ASSETS     
Current assets:     
Cash and cash equivalents1,431,317 1,265,792 199,674
Restricted cash7,795 9,083 1,433
Short-term investments63,757 63,482 10,014
Accounts receivable, net92,197 103,616 16,345
Contract assets, net42,391 43,923 6,928
Inventories, net123,210 130,175 20,535
Prepayments and other current assets, net60,279 69,331 10,937
Total current assets1,820,946 1,685,402 265,866
Non-current assets:     
Equity method investment910 773 122
Property and equipment, net325,438 322,171 50,821
Operating right-of-use assets81,007 72,501 11,437
Intangible assets, net5,150 4,246 669
Other non-current assets45,136 22,703 3,581
Total non-current assets457,641 422,394 66,630
TOTAL ASSETS2,278,587 2,107,796 332,496


Burning Rock Biotech Limited

Unaudited Condensed Consolidated Balance Sheets (Continued)

(in thousands)
 
 As of
 December 31,
2021

 March 31,
2022
 March 31,
2022
 RMBRMBUS$
LIABILITIES AND SHAREHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable63,080  97,892  15,442 
Deferred revenue142,871  159,148  25,105 
Accrued liabilities and other current liabilities127,892  104,092  16,420 
Customer deposits972  972  153 
Short-term borrowing2,370  2,370  374 
Current portion of operating lease liabilities34,999  35,298  5,568 
Total current liabilities372,184  399,772  63,062 
Non-current liabilities:   
Non-current portion of operating lease liabilities49,316  39,811  6,280 
Other non-current liabilities11,776  13,636  2,151 
Total non-current liabilities61,092  53,447  8,431 
TOTAL LIABILITIES433,276  453,219  71,493 


Shareholders’ equity:
   
Class A ordinary shares116  116  19 
Class B ordinary shares21  21  3 
Treasury stock-  (3,258) (514)
Additional paid-in capital4,280,956  4,357,933  687,447 
Accumulated deficits(2,228,713) (2,490,101) (392,804)
Accumulated other comprehensive loss(207,069) (210,134) (33,148)
Total shareholders’ equity1,845,311  1,654,577  261,003 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY2,278,587  2,107,796  332,496 


Burning Rock Biotech Limited

Unaudited Condensed Statements of Cash Flows

(in thousands)
 
 For the three months ended
 March 31,
2021

 March 31,
2022

 March 31,
2022

 RMB
 RMB
 US$
Net cash used in operating activities(113,145) (144,361) (22,772)
Net cash generated from (used in) investing activities288,329  (13,011) (2,050)
Net cash used in financing activities(4,162) (3,934) (621)
Effect of exchange rate on cash, cash equivalents and restricted cash16,658  (2,931) (464)
Net increase (decrease) in cash, cash equivalents and restricted cash187,680  (164,237) (25,907)
Cash, cash equivalents and restricted cash at the beginning of period1,925,206  1,439,112  227,014 
Cash, cash equivalents and restricted cash at the end of period2,112,886  1,274,875  201,107 
   


Burning Rock Biotech Limited

Reconciliations of GAAP and Non-GAAP Results
 
 For the three months ended
 March 31,
2021
 June 30,
2021
 September 30,
2021
 December 31,
2021
 March 31,
2022

 (RMB in thousands)
Gross profit

76,940  90,231  91,596  105,379  87,580 
Add: depreciation and amortization206  437  1,382  1,981  5,139 
Non-GAAP gross profit77,146  90,668  92,978  107,360  92,719 
Total revenues106,623  127,279  126,615  147,345  135,524 
Gross margin72.2% 70.9% 72.3% 71.5% 64.6%
Non-GAAP gross margin72.4% 71.2% 73.4% 72.9% 68.4%


Coordonnées