Burning Rock Reports Second Quarter 2024 Financial Results


GUANGZHOU, China, Aug. 22, 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 June 30, 2024.

Recent Business Updates

  • Therapy Selection
    • Presented study results on small-cell lung cancer and colorectal cancer at the ASCO in June 2024. “The efficacy and safety of high dose Almonertinib in untreated EGFR-mutated NSCLC with brain metastases, including biomarker analysis” and “Individualized tumor-informed circulating tumor DNA analysis for molecular residual disease detection in predicting recurrence and efficacy of adjuvant chemotherapy in colorectal cancer”.
  • Pharma Services
    • New companion diagnostics (CDx) collaboration announced with Bayer in China.

Second Quarter 2024 Financial Results

Total Revenues were RMB135.5 million (US$18.7 million) for the three months ended June 30, 2024, representing a 7.3% decrease from RMB146.3 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 RMB59.9 million (US$8.2 million) for the three months ended June 30, 2024, representing a 11.2% increase from RMB53.8 million for the same period in 2023, driven by an increase in sales volume.
  • Revenue generated from central laboratory business was RMB48.8 million (US$6.7 million) for the three months ended June 30, 2024, representing a 26.4% decrease from RMB66.2 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 RMB26.9 million (US$3.7 million) for the three months ended June 30, 2024, representing a 2.6% increase from RMB26.2 million for the same period in 2023, primarily attributable to an increased development and testing services performed for our pharma customers.

Cost of revenues was RMB40.1 million (US$5.5 million) for the three months ended June 30, 2024, representing an 12.5% decrease from RMB45.8 million for the same period in 2023, primarily due to (i) a decrease in cost of central laboratory business, which was in line with the decrease in revenue generated from this business; and (ii) a decrease in amortization expense for all kinds of business.

Gross profit was RMB95.4 million (US$13.1 million) for the three months ended June 30, 2024, representing a 5.0% decrease from RMB100.4 million for the same period in 2023. Gross margin was 70.4% for the three months ended June 30, 2024, compared to 68.7% for the same period in 2023. By channel, gross margin of central laboratory business was 78.8% for the three months ended June 30, 2024, compared to 78.3% during the same period in 2023; gross margin of in-hospital business was 73.6% for the three months ended June 30, 2024, compared to 62.0% during the same period in 2023, primarily due to a decrease in amortization; gross margin of pharma research and development services was 48.2% for the three months ended June 30, 2024, compared to 58.0% during the same period of 2023, primarily due to a decrease in test volume of higher margin projects.

Non-GAAP gross profit, which excludes depreciation and amortization expenses, was RMB101.9 million (US$14.0 million) for the three months ended June 30, 2024, representing a 6.8% decrease from RMB109.4 million for the same period in 2023. Non-GAAP gross margin was 75.2% for the three months ended June 30, 2024, compared to 74.8% for the same period in 2023.

Operating expenses were RMB206.7 million (US$28.4 million) for the three months ended June 30, 2024, representing a 12.5% decrease from RMB236.1 million for the same period in 2023. The decrease was primarily driven by budget control measures and headcount reduction to improve the Company’s operating efficiency.

  • Research and development expenses were RMB65.0 million (US$8.9 million) for the three months ended June 30, 2024, representing a 32.2% decrease from RMB95.8 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; (ii) a decrease in the expenditure for research projects; and (iii) a decrease in amortized expenses for office building decoration.
  • Selling and marketing expenses were RMB48.9 million (US$6.7 million) for the three months ended June 30, 2024, representing a 31.0% decrease from RMB70.8 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 RMB92.8 million (US$12.8 million) for the three months ended June 30, 2024, representing a 33.5% increase from RMB69.5 million for the same period in 2023, primarily due to an increase in amortized expense on share-based compensation.

Net loss was RMB108.0 million (US$14.9 million) for the three months ended June 30, 2024, compared to RMB131.2 million for the same period in 2023.

Cash, cash equivalents, restricted cash and short-term investments were RMB533.0 million (US$73.3 million) as of June 30, 2024.

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
 June 30,
2023
 September
30, 2023
 December
31, 2023
 March 31,
2024
 June 30,
2024
 
In-hospital Channel:          
Pipeline partner hospitals(1)30 29 28 28 29 
Contracted partner hospitals(2)50 55 59 59 59 
Total number of partner hospitals 80   84   87   87  88 


(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

June 30,
2023
 September
30, 2023
 December
31, 2023
 March 31,
2024
 June 30,
2024
 
                       (RMB in thousands)
Central laboratory channel66,239 53,481 51,288 47,614 48,773 
In-hospital channel53,835 54,496 28,809 57,387 59,872 
Pharma research and development channel26,194 19,589 40,988 20,622 26,888 
Total revenues146,268
 127,566
  121,085  125,623  135,533 
         


                               For the three months ended 
Gross profit

June 30,
2023
 September
30, 2023
 December
31, 2023
 March 31,
2024
 June 30,
2024
 
                         (RMB in thousands)
Central laboratory channel51,876 41,487 41,886
 37,002 38,424 
In-hospital channel33,353 35,459 12,910
 39,192 44,058 
Pharma research and development channel15,193 8,974 23,317
 9,500 12,956 
Total gross profit
100,422 85,920     78,113  85,694  95,438 
         


                             For the three months ended
Share-based compensation expenses

June 30,
2023
 September
30, 2023
 December
31, 2023
 March 31,
2024
 June 30,
2024
  
                             (RMB in thousands)  
Cost of revenues627 680 654
 596 464  
Research and development expenses15,301 12,161 12,401 12,287 12,008  
Selling and marketing expenses3,389 2,848 1,816 508 1,232  
General and administrative expenses18,502 57,704 56,472 55,990 54,407  
Total share-based compensation expenses

37,819   73,393   71,343  69,381  68,111  
            

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
 June 30,
 2023
 September
30, 2023
 December
31,2023
 March 31,
2024
 June 30,
2024
 June 30,
2024
 
 RMBRMB RMB RMB RMB US$ 
Revenues146,268 127,566 121,085 125,623 135,533 18,650 
Cost of revenues(45,846) (41,646) (42,972) (39,929) (40,095) (5,517) 
Gross profit100,422 85,920 78,113 85,694 95,438 13,133 
Operating expenses:       
Research and development expenses(95,779) (83,701) (73,119) (65,985) (64,952) (8,938) 
Selling and marketing expenses(70,842) (62,310) (49,785) (46,856) (48,907) (6,730) 
General and administrative expenses(69,525) (118,724) (121,533) (98,681) (92,794) (12,769) 
Total operating expenses(236,146) (264,735) (244,437) (211,522) (206,653) (28,437) 
Loss from operations (135,724) (178,815) (166,324) (125,828) (111,215) (15,304) 
Interest income5,255 4,018 5,539 4,038 3,187 439 
Other income (expense), net(118) (157) 160 434 (82) (11) 
Foreign exchange (loss) gain, net(210) 423 (517) (13) 262 36 
Loss before income tax(130,797) (174,531) (161,142) (121,369) (107,848) (14,840) 
Income tax expenses(445) (450) (1,071) (180) (190) (26) 
Net loss(131,242) (174,981) (162,213) (121,549) (108,038) (14,866) 
Net loss attributable to Burning Rock Biotech Limited’s shareholders(131,242) (174,981) (162,213) (121,549) (108,038) (14,866) 
Net loss attributable to ordinary shareholders(131,242) (174,981) (162,213) (121,549) (108,038) (14,866) 
Loss per share for class A and class B ordinary shares:       
Class A ordinary shares - basic and diluted(1.28) (1.71) (1.58) (1.19) (1.05) (0.14) 
Class B ordinary shares - basic and diluted(1.28) (1.71) (1.58) (1.19) (1.05) (0.14) 
Weighted average shares outstanding used in loss per share computation:        
Class A ordinary shares - basic and diluted85,151,052 85,000,869 85,071,360 85,219,188 85,271,858 85,271,858 
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 adjustments14,829 (1,955) (3,026) 590 940 129 
Total comprehensive loss(116,413)  (176,936 ) (165,239) (120,959 ) (107,098) (14,737) 
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders(116,413)  (176,936) (165,239) (120,959 ) (107,098) (14,737) 
             

Burning Rock Biotech Limited
Unaudited Condensed Statements of Comprehensive Loss
(in thousands, except for number of shares and per share data)

 For the six months ended
 June 30,
2023
 June 30,
2024
 June 30,
2024
 
 RMB RMB US$ 
Revenues288,784  261,156 35,937 
Cost of revenues(89,590) (80,024) (11,012) 
Gross profit199,194  181,132 24,925 
Operating expenses:   
Research and development expenses(190,196) (130,937) (18,018) 
Selling and marketing expenses(135,616) (95,763) (13,177) 
General and administrative expenses(197,564) (191,475) (26,349) 
Total operating expenses(523,376) (418,175) (57,544) 
Loss from operations (324,182) (237,043) (32,619) 
Interest income8,399 7,225 994 
Other income, net481 352 48 
Foreign exchange loss, net(326) 249 34 
Loss before income tax(315,628) (229,217) (31,543) 
Income tax expenses(867) (370) (51) 
Net loss(316,495) (229,587) (31,594) 
Net loss attributable to Burning Rock Biotech Limited’s shareholders(316,495) (229,587) (31,594) 
Net loss attributable to ordinary shareholders(316,495) (229,587) (31,594) 
Loss per share for class A and class B ordinary shares:   
Class A ordinary shares - basic and diluted(3.09) (2.24) (0.31) 
Class B ordinary shares - basic and diluted(3.09) (2.24) (0.31) 
Weighted average shares outstanding used in loss per share computation:    
Class A ordinary shares - basic and diluted85,108,555 85,246,969 85,246,969 
Class B ordinary shares - basic and diluted17,324,848 17,324,848 17,324,848 
Other comprehensive income (loss), net of tax of nil:   
Foreign currency translation adjustments9,170 1,530 211 
Total comprehensive loss(307,325) (228,057) (31,383) 
Total comprehensive loss attributable to Burning Rock Biotech Limited’s shareholders(307,325) (228,057) (31,383) 
       

Burning Rock Biotech Limited
Unaudited Condensed Consolidated Balance Sheets
(In thousands)

 As of   
 December 31,
2023
 June 30,
2024
 June 30,
2024
 
 RMB  RMB US$ 
ASSETS      
Current assets:      
Cash and cash equivalents615,096 532,542 73,280 
Restricted cash120 505 69 
Accounts receivable, net126,858 153,641 21,142 
Contract assets, net22,748 20,018 2,755 
Inventories, net69,020 65,805 9,056 
Prepayments and other current assets, net50,254 28,460 3,916 
Convertible note receivable- 5,320 732 
Total current assets 884,096  806,291 110,950 


Non-current assets:
      
Equity method investment337 247 34 
Convertible note receivable5,320 - - 
Property and equipment, net131,912 100,716 13,860 
Operating right-of-use assets12,284 105,429 14,508 
Intangible assets, net964 724 100 
Other non-current assets5,088 9,976 1,372 
Total non-current assets 155,905  217,092 29,874 
TOTAL ASSETS   1,040,001  1,023,383 140,824 
       

Burning Rock Biotech Limited
Unaudited Condensed Consolidated Balance Sheets (Continued)
(in thousands)

 As of
 December 31,
2023
 June 30,
2024
 June 30,
2024
 
 RMB RMBUS$
LIABILITIES AND SHAREHOLDERS’ EQUITY   
Current liabilities:   
Accounts payable18,061 25,870 3,560 
Deferred revenue130,537 119,352 16,423 
Accrued liabilities and other current liabilities104,935 86,300 11,876 
Customer deposits1,197 1,197 165 
Current portion of operating lease liabilities8,634 26,922 3,705 
Total current liabilities 263,364  259,641 35,729 
Non-current liabilities:   
Non-current portion of operating lease liabilities3,690 80,988 11,144 
Other non-current liabilities4,537 4,908 676 
Total non-current liabilities 8,227  85,896 11,820 
TOTAL LIABILITIES 271,591  345,537 47,549 


Shareholders’ equity:
   
Class A ordinary shares116 116 16 
Class B ordinary shares21 21 3 
Additional paid-in capital4,849,337 4,986,830 686,211 
Treasury stock(65,896) (65,896) (9,068) 
Accumulated deficits(3,853,635) (4,083,222) (561,870) 
Accumulated other comprehensive loss(161,533) (160,003) (22,017) 
Total shareholders’ equity768,410  677,846 93,275 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY1,040,001  1,023,383 140,824 
       

Burning Rock Biotech Limited
Unaudited Condensed Statements of Cash Flows
(in thousands)

 For the three months ended
 June 30,
2023
 June 30,
2024
 June 30,
2024
 
 RMBRMBUS$
Net cash used in operating activities(79,204) (40,836) (5,619) 
Net cash used in investing activities(2,928) (227) (31) 
Net cash used in financing activities(1,003) - - 
Effect of exchange rate on cash, cash equivalents and restricted cash13,271 1,436 196 
Net decrease in cash, cash equivalents and restricted cash (69,864) (39,627) (5,454) 
Cash, cash equivalents and restricted cash at the beginning of period803,142 572,674 78,803 
Cash, cash equivalents and restricted cash at the end of period733,278  533,047 73,349 
    


 For the six months ended
 June 30,
2023
 June 30,
2024
 June 30,
2024
 
 RMBRMBUS$
Net cash used in operating activities(192,347) (81,045) (11,152) 
Net cash used in investing activities(6,987) (2,613) (360) 
Net cash used in financing activities(1,035) - - 
Effect of exchange rate on cash, cash equivalents and restricted cash8,379 1,489 204 
Net decrease in cash, cash equivalents and restricted cash (191,990) (82,169) (11,308) 
Cash, cash equivalents and restricted cash at the beginning of period925,268 615,216 84,657 
Cash, cash equivalents and restricted cash at the end of period733,278  533,047 73,349 
    

Burning Rock Biotech Limited
Reconciliations of GAAP and Non-GAAP Results

  For the three months ended
 June 30,
2023
 September
30, 2023
 December
31, 2023
 March 31,
2024
 June 30,
2024
 
  (RMB in thousands)
Gross profit:

  
Central laboratory channel51,876 41,487 41,886 37,002 38,424 
In-hospital channel33,353 35,459 12,910 39,192 44,058 
Pharma research and development channel15,193 8,974 23,317 9,500 12,956 
Total gross profit
100,422 85,920 78,113 85,694 95,438 
Add: depreciation and amortization:      
Central laboratory channel2,645 2,550 2,414 1,919 1,226 
In-hospital channel2,637 2,751 2,728 1,524 824 
Pharma research and development channel3,665 3,863 3,808 3,856 4,417 
Total depreciation and amortization included in cost of revenues
8,947   9,164  8,950  7,299  6,467 
Non-GAAP gross profit:     
Central laboratory channel54,521 44,037 44,300 38,921 39,650 
In-hospital channel35,990 38,210 15,638 40,716 44,882 
Pharma research and development channel18,858 12,837 27,125 13,356 17,373 
Total non-GAAP gross profit109,369
 95,084
 87,063 92,993  101,905 
Non-GAAP gross margin:     
Central laboratory channel82.3% 82.3% 86.4% 81.7% 81.3% 
In-hospital channel66.9% 70.1% 54.3% 70.9% 75.0% 
Pharma research and development channel72.0% 65.5% 66.2% 64.8% 64.6% 
Total non-GAAP gross margin74.8% 74.5% 71.9% 74.0% 75.2%