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Burning Rock Reports First Quarter 2023 Financial Results
Press Releases

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 tested 7,743   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 channel 74,211   78,597   89,992   71,970   61,804  
In-hospital channel 48,957   34,177   49,636   42,526   51,561  
Pharma research and development channel 12,356   18,072   15,003   27,741   29,151  
Total revenues 135,524   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 channel 50,574   57,575   69,991   54,507   48,090  
In-hospital channel 33,396   20,012   31,593   26,999   34,409  
Pharma research and development channel 3,610   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 revenues 365   441   481   496   353  
Research and development expenses 12,299   11,923   13,978   14,673   13,612  
Selling and marketing expenses 1,774   2,158   2,346   2,247   1,606  
General and administrative expenses 65,715   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 period 1,439,112     925,268     134,729  
Cash, cash equivalents and restricted cash at the end of period 1,274,875     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 channel 50,574     57,575     69,991     54,507     48,090  
In-hospital channel 33,396     20,012     31,593     26,999     34,409  
Pharma research and development channel 3,610     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 channel 2,553     2,545     3,138     3,609     2,567  
In-hospital channel 93     1,428     2,479     2,449     2,582  
Pharma research and development channel 2,493     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 channel 53,127     60,120     73,129     58,116     50,657  
In-hospital channel 33,489     21,440     34,072     29,448     36,991  
Pharma research and development channel 6,103     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 channel 71.6 %   76.5 %   81.3 %   80.8 %   82.0 %
In-hospital channel 68.4 %   62.7 %   68.6 %   69.2 %   71.7 %
Pharma research and development channel 49.4 %   51.7 %   65.4 %   82.3 %   69.5 %
Total non-GAAP gross margin 68.4 %   69.5 %   75.7 %   77.6 %   75.7 %

 

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