Burning Rock Reports Second Quarter 2024 Financial Results

Rhea-AI Summary

Burning Rock Biotech (NASDAQ: BNR, LSE: BNR) reported its Q2 2024 financial results. Total revenues decreased by 7.3% to RMB135.5 million (US$18.7 million) compared to the same period in 2023. The in-hospital segment showed 11.2% growth, while the central laboratory business experienced a 26.4% decline. Gross profit decreased by 5.0% to RMB95.4 million (US$13.1 million), with an improved gross margin of 70.4%. Operating expenses decreased by 12.5% due to efficiency measures. Net loss narrowed to RMB108.0 million (US$14.9 million). The company's cash position stood at RMB533.0 million (US$73.3 million) as of June 30, 2024.

Positive

• In-hospital segment revenue increased by 11.2% to RMB59.9 million
• Gross margin improved to 70.4% from 68.7% in the same period last year
• Operating expenses decreased by 12.5% due to efficiency measures
• Net loss narrowed from RMB131.2 million to RMB108.0 million

Negative

• Total revenues decreased by 7.3% to RMB135.5 million
• Central laboratory business revenue declined by 26.4% to RMB48.8 million
• Gross profit decreased by 5.0% to RMB95.4 million
• Pharma research and development services gross margin decreased to 48.2% from 58.0%

Insights

Financial Analyst

Burning Rock's Q2 2024 results reveal a mixed financial picture. While total revenues decreased by 7.3% year-over-year to RMB135.5 million, the in-hospital segment showed promising growth of 11.2%. This shift towards in-hospital testing is a strategic move that could potentially lead to more stable revenue streams in the long term.

The company's gross margin improved slightly to 70.4%, up from 68.7% in the previous year, indicating better cost management. However, the net loss of RMB108.0 million, although an improvement from last year, remains a concern. The reduction in operating expenses by 12.5% shows efforts to streamline operations, but sustained profitability remains elusive.

With RMB533.0 million in cash and equivalents, Burning Rock has a decent runway, but investors should monitor cash burn rate closely. The transition to in-hospital testing and focus on pharma services could be pivotal for future growth, but execution risks remain.

Oncology Research Analyst

Burning Rock's presentation of study results on small-cell lung cancer and colorectal cancer at ASCO 2024 demonstrates its commitment to advancing precision oncology. The focus on EGFR-mutated NSCLC with brain metastases and circulating tumor DNA analysis for colorectal cancer recurrence prediction are cutting-edge areas in oncology research.

The new companion diagnostics collaboration with Bayer in China is a significant development. CDx partnerships can lead to increased adoption of precision medicine approaches and potentially drive revenue growth. However, the transition from central-lab to in-hospital testing might impact short-term growth but could lead to broader market penetration in the long run.

The company's continued investment in R&D, despite a 32.2% decrease in expenses, is important for maintaining its competitive edge in the rapidly evolving field of NGS-based cancer diagnostics. Investors should watch for future clinical validations and regulatory approvals resulting from these research efforts.

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 channel	66,239		53,481		51,288		47,614		48,773
In-hospital channel	53,835		54,496		28,809		57,387		59,872
Pharma research and development channel	26,194		19,589		40,988		20,622		26,888
Total revenues	146,268		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 channel	51,876		41,487		41,886		37,002		38,424
In-hospital channel	33,353		35,459		12,910		39,192		44,058
Pharma research and development channel	15,193		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 revenues	627		680		654		596		464
Research and development expenses	15,301		12,161		12,401		12,287		12,008
Selling and marketing expenses	3,389		2,848		1,816		508		1,232
General and administrative expenses	18,502		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
	RMB		RMB		RMB			RMB			RMB		US$
Revenues	146,268		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 profit	100,422		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 income	5,255		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 diluted	85,151,052		85,000,869		85,071,360			85,219,188			85,271,858		85,271,858
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	14,829		(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$
Revenues	288,784		261,156		35,937
Cost of revenues	(89,590)		(80,024)		(11,012)
Gross profit	199,194		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 income	8,399		7,225		994
Other income, net	481		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 diluted	85,108,555		85,246,969		85,246,969
Class B ordinary shares - basic and diluted	17,324,848		17,324,848		17,324,848
Other comprehensive income (loss), net of tax of nil:
Foreign currency translation adjustments	9,170		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 equivalents	615,096		532,542		73,280
Restricted cash	120		505		69
Accounts receivable, net	126,858		153,641		21,142
Contract assets, net	22,748		20,018		2,755
Inventories, net	69,020		65,805		9,056
Prepayments and other current assets, net	50,254		28,460		3,916
Convertible note receivable	-		5,320		732
Total current assets	884,096		806,291		110,950
Non-current assets:
Equity method investment	337		247		34
Convertible note receivable	5,320		-		-
Property and equipment, net	131,912		100,716		13,860
Operating right-of-use assets	12,284		105,429		14,508
Intangible assets, net	964		724		100
Other non-current assets	5,088		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		RMB		US$
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	18,061		25,870		3,560
Deferred revenue	130,537		119,352		16,423
Accrued liabilities and other current liabilities	104,935		86,300		11,876
Customer deposits	1,197		1,197		165
Current portion of operating lease liabilities	8,634		26,922		3,705
Total current liabilities	263,364		259,641		35,729
Non-current liabilities:
Non-current portion of operating lease liabilities	3,690		80,988		11,144
Other non-current liabilities	4,537		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 shares	116		116		16
Class B ordinary shares	21		21		3
Additional paid-in capital	4,849,337		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’ equity	768,410		677,846		93,275
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	1,040,001		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
	RMB		RMB			US$
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 cash	13,271		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 period	803,142		572,674			78,803
Cash, cash equivalents and restricted cash at the end of period	733,278		533,047			73,349

	For the six months ended
	June 30, 2023		June 30, 2024				June 30, 2024
	RMB		RMB				US$
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 cash	8,379		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 period	925,268		615,216				84,657
Cash, cash equivalents and restricted cash at the end of period	733,278		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 channel	51,876		41,487		41,886		37,002		38,424
In-hospital channel	33,353		35,459		12,910		39,192		44,058
Pharma research and development channel	15,193		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 channel	2,645		2,550		2,414		1,919		1,226
In-hospital channel	2,637		2,751		2,728		1,524		824
Pharma research and development channel	3,665		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 channel	54,521		44,037		44,300		38,921		39,650
In-hospital channel	35,990		38,210		15,638		40,716		44,882
Pharma research and development channel	18,858		12,837		27,125		13,356		17,373
Total non-GAAP gross profit	109,369		95,084		87,063		92,993		101,905
Non-GAAP gross margin：
Central laboratory channel	82.3%		82.3%		86.4%		81.7%		81.3%
In-hospital channel	66.9%		70.1%		54.3%		70.9%		75.0%
Pharma research and development channel	72.0%		65.5%		66.2%		64.8%		64.6%
Total non-GAAP gross margin	74.8%		74.5%		71.9%		74.0%		75.2%

FAQ

What was Burning Rock's (BNR) total revenue in Q2 2024?

Burning Rock's total revenue in Q2 2024 was RMB135.5 million (US$18.7 million), representing a 7.3% decrease from the same period in 2023.

How did Burning Rock's (BNR) in-hospital segment perform in Q2 2024?

Burning Rock's in-hospital segment revenue grew by 11.2% to RMB59.9 million (US$8.2 million) in Q2 2024 compared to the same period in 2023.

What was Burning Rock's (BNR) net loss for Q2 2024?

Burning Rock reported a net loss of RMB108.0 million (US$14.9 million) for Q2 2024, compared to RMB131.2 million for the same period in 2023.

How much cash and short-term investments did Burning Rock (BNR) have as of June 30, 2024?

As of June 30, 2024, Burning Rock had cash, cash equivalents, restricted cash, and short-term investments totaling RMB533.0 million (US$73.3 million).