Burning Rock Reports First Quarter 2024 Financial Results

Burning Rock Reports First Quarter 2024 Financial Results




Burning Rock Reports First Quarter 2024 Financial Results

GUANGZHOU, China, May 29, 2024 (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, 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:

Corporate structure reorganization

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%
                   

A photo accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/370e7914-309e-48a2-b52f-03fe37ffa17d