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home / news releases / BNR - Burning Rock Reports First Quarter 2023 Financial Results

BNR - Burning Rock Reports First Quarter 2023 Financial Results

Burning Rock Biotech Limited

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.

Contact: IR@brbiotech.com

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
%



Stock Information
Company Name: Burning Rock Biotech Limited
Stock Symbol: BNR
Market: NASDAQ
Website: brbiotech.com
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