BNR - Burning Rock Reports Fourth Quarter and Full Year 2022 Financial Results

GUANGZHOU, China, March 28, 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 and the year ended December 31, 2022.

2022 Business Overview and Recent Updates

• Corporate
  • Listed on the Main Market of the London Stock Exchange (the “LSE”) by way of a direct listing on November 1, 2022, offering an alternative listing venue in addition to the Nasdaq Global Market.
  • Completed profitability-driven organizational optimization.
• Early Detection
  • OverC ^TM Multi-Cancer Detection Blood Test (MCDBT) obtained Breakthrough Device Designation of the U.S. Food and Drug Administration (FDA) in January 2023, the third of its kind globally.
  • THUNDER study for 6-cancer test released on Annals of Oncology in March, 2023, achieving a comparably high sensitivity of 69.1% and a specificity of 98.9% in detecting six cancers, and showing an impressive performance of ELSA-seq using cfDNA in cancer detection and origin prediction.
  • Completed PROMISE study (2,035 participants, 9-cancer test development) in June 2022, continued to carry out PREDICT and PRESCIENT studies (17,000 participants, 22-cancer test development), launched PREVENT study (12,500 subjects, validation) in the second quarter of 2022.
• Therapy Selection and Minimal Residual Disease (MRD)
  • Gained NMPA approval for a 9-gene panel, the Company’s second NMPA-approved product.
  • Presented additional MRD datasets on colorectal and pancreatic cancers at the ASCO Gastrointestinal Cancers Symposium (ASCO GI) in January 2023. "Patient-specific tumor-informed circulating tumor DNA (ctDNA) analysis for molecular residual disease (MRD) detection in surgical patients with stages I-IV colorectal cancer (CRC)" and "Patient-specific tumor-informed circulating tumor DNA (ctDNA) assay predicts cancer recurrence in patients with resected pancreatic cancer".
• Pharma Services
  • Total value of new contracts entered into during 2022 amounted to RMB250 million, representing a 36% increase from 2021.

Fourth Quarter 2022 Financial Results

Revenues were RMB142.2 million (US$20.6 million) for the three months ended December 31, 2022, representing a 3.5% decrease from RMB147.3 million for the same period in 2021.

• Revenue generated from central laboratory business was RMB72.0 million (US$10.4 million) for the three months ended December 31, 2022, representing a 16.3% decrease from RMB86.0 million for the same period in 2021, primarily attributable to the resurgence of COVID-19 pandemic that resulted in a sharp drop in the number of tests performed.
• Revenue generated from in-hospital business was RMB42.5 million (US$6.2 million) for the three months ended December 31, 2022, representing a 18.1% decrease from RMB51.9 million for the same period in 2021, driven by a decrease of sales volume as affected by the resurgence of COVID-19.
• Revenue generated from pharma research and development services was RMB27.7 million (US$4.0 million) for the three months ended December 31, 2022, representing a 193.2% increase from RMB9.5 million for the same period in 2021, primarily attributable to a further increased testing volume performed for our pharma customers.
  

Cost of revenues was RMB41.0 million (US$5.9 million) for the three months ended December 31, 2022, remaining relatively stable compared to RMB42.0 million for the same period in 2021.

Gross profit was RMB101.3 million (US$14.7 million) for the three months ended December 31, 2022, representing a 3.9% decrease from RMB105.4 million for the same period in 2021. Gross margin was 71.2% for the three months ended December 31, 2022, compared to 71.5% of the same period in 2021. By channel, gross margin of central laboratory business was 75.7% for the three months ended December 31, 2022, compared to 76.7% during the same period in 2021; gross margin of in-hospital business was 63.5% for the three months ended December 31, 2022, compared to 65.9% during the same period in 2021; gross margin of pharma research and development services was 71.2% for the three months ended December 31, 2022, compared to 55.0% during the same period of 2021, primarily due to an increase in test volume of higher margin projects.

Non-GAAP gross profit, which excludes depreciation and amortization expenses, was RMB110.4 million (US$16.0 million) for the three months ended December 31, 2022, representing a 2.8% increase from RMB107.4 million for the same period in 2021. Non-GAAP gross margin was 77.6% for the three months ended December 31, 2022, compared to 72.9% for the same period in 2021.

Operating expenses were RMB318.7 million (US$46.2 million) for the three months ended December 31, 2022, representing a 10.9% decrease from RMB357.5 million for the same period in 2021. The decrease was primarily driven by budget control measures and headcount reduction to improve the Company’s operating efficiency.

• Research and development expenses were RMB100.8 million (US$14.6 million) for the three months ended December 31, 2022, representing a 10.6% decrease from RMB112.7 million for the same period in 2021, primarily due to (i) a decrease in the expenditure for early cancer detection research, and (ii) a decrease in research and development personnel’s staff cost, partially offset by an increase in amortized expense on share-based compensation to constantly motivate staff.
• Selling and marketing expenses were RMB85.2 million (US$12.3 million) for the three months ended December 31, 2022, representing a 17.5% decrease from RMB103.2 million for the same period in 2021, primarily due to (i) a decrease in staff cost resulted from the reorganization of the selling department and improvement in operating efficiency; (ii) a decrease in amortized expense on share-based compensation; and (iii) a decrease in advertising and marketing fee.
• General and administrative expenses were RMB132.7 million (US$19.2 million) for the three months ended December 31, 2022, representing a 6.3% decrease from RMB141.6 million for the same period in 2021, primarily due to (i) a decrease in general and administrative personnel’s staff cost; (ii) a decrease in allowance for credit loss in relation to accounts receivables; and (iii) an increase in depreciation expenses for new buildings.
  

Net loss was RMB216.2 million (US$31.4 million) for the three months ended December 31, 2022, compared to RMB251.1 million for the same period in 2021.

Cash, cash equivalents, restricted cash and short-term investments were RMB925.3 million (US$134.2 million) as of December 31, 2022.

Full Year 2022 Financial Results

Revenues were RMB563.2 million (US$81.7 million) for 2022, representing a 10.9% increase from RMB507.9 million for 2021.

• Revenue generated from central laboratory business was RMB314.8 million (US$45.6 million) for 2022, remaining relatively stable compared to RMB319.4 million for 2021.
• Revenue generated from in-hospital business was RMB175.3 million (US$25.4 million) for 2022, representing a 6.2% increase from RMB165.1 million for 2021, primarily due to (i) increased demand from existing hospitals and (ii) demand from eight new contracted partner hospitals added to the Company’s in-hospital channel in 2022.
• Revenue generated from pharma research and development services was RMB73.2 million (US$10.6 million) for 2022, representing a 212.8% increase from RMB23.4 million for 2021, primarily attributable to increased development and testing services performed for our pharma customers.
  

Cost of revenues was RMB183.2 million (US$26.6 million) for 2022, representing a 27.5% increase from RMB143.7 million for 2021, primarily due to an increase in cost of revenues for our in-hospital business and pharma research and development services.

Gross profit was RMB380.0 million (US$55.1 million) for 2022, representing a 4.4% increase from RMB364.1 million for 2021. Gross margin decreased to 67.5% for 2022 from 71.7% for 2021.

Non-GAAP gross profit, which excludes depreciation and amortization expenses, was RMB411.0 million (US$59.6 million) for 2022, representing a 11.6% increase from RMB368.2 million for 2021. Non-GAAP gross margin was 73.0% for 2022, compared to 72.5% for 2021.

Operating expenses were RMB1,360.4 million (US$197.2 million) for 2022, representing a 17.2% increase from RMB1,161.2 million for 2021.

• Research and development expenses were RMB421.9 million (US$61.2 million) for 2022, representing a 14.7% increase from RMB367.9 million for 2021, primarily due to (i) an increase in expenditure for early cancer detection research, (ii) an increase in depreciation expenses for new buildings; and (iii) an increase in amortized expense on share-based compensation.
• Selling and marketing expenses were RMB370.3 million (US$53.7 million) for 2022, representing a 22.2% increase from RMB303.1 million for 2021, primarily due to (i) an increase in staff cost of sales and marketing personnel in anticipation of the commercialization of our early detection products and pharma research and development services; (ii) an increase in conference fee and marketing fees; and (iii) an increase in amortized expense on share-based compensation.
• General and administrative expenses were RMB568.3 million (US$82.4 million) for 2022, representing a 15.9% increase from RMB490.3 million for 2021, primarily due to (i) an increase in depreciation expenses for new buildings, and (ii) an increase in allowance for credit loss in relation to accounts receivables; and (iii) an increase in amortized expense on share-based compensation.
  

Net loss was RMB971.2 million (US$140.8 million) for 2022, compared to RMB796.7 million for 2021.

2023 Financial Guidance

We currently expect our full year 2023 revenues to grow approximately 20% over 2022.

Silicon Valley Bank Event

The Company promptly transferred its cash deposits at Silicon Valley Bank to its accounts with other major financial institutions as a result of the Company’s regular risk assessment process. No loss was incurred to such deposits. We maintain bank accounts with a diversified set of financial institutions.

Conference Call Information

Burning Rock will host a conference call to discuss the fourth quarter and full year 2022 financial results at 8:00 a.m. U.S. Eastern Time (8:00 p.m. Hong Kong time) on March 28, 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/BI1cc3eb383ecf42c6969319f9e9cdd02c .

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/tx2a7ju9 .

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

^{(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.}

^{(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

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Reconciliations of GAAP and Non-GAAP Results

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Reconciliations of GAAP and Non-GAAP Results