Genetron Health Reports Third Quarter 2021 Unaudited Financial Results

·20 min read

BEIJING, Nov. 30, 2021 (GLOBE NEWSWIRE) -- Genetron Holdings Limited (“Genetron Health” or the “Company”, NASDAQ: GTH), a leading precision oncology platform company in China that specializes in offering molecular profiling tests, early cancer screening products and companion diagnostics development, today reported its unaudited preliminary financial results for the third quarter ended September 30, 2021.

Third Quarter and Recent Highlights

  • Financials:

    • Recorded total revenue of RMB 152.5 million (US $23.7 million) for the third quarter of 2021, representing a 36.2% increase over the same period of 2020

      • LDT revenue was RMB 93.0 million (US $14.4 million) in the third quarter of 2021, representing 30.2% growth compared to the prior year period

      • IVD revenue was RMB 51.3 million (US $8.0 million) in the third quarter of 2021, representing 70.5% growth compared to the prior year period

    • Achieved gross margin of 69.0% for the third quarter 2021 compared to 62.2% in the same period of 2020, primarily driven by improvements in both the LDT and IVD business lines

  • Early screening franchise update:

    • Genetron has broadened its registrational strategy for its early screening program for hepatocellular carcinoma (HCC). The Company has initiated enrollment for a PCR-based trial in November, with plans to enroll the NGS-based trial in the next few months. Genetron anticipates potential NMPA approvals for both assays in 2023

    • Developed a multi-omics blood-based CRC early screening assay, which was trained in a retrospective cohort of 100 cases and 100 controls, and validated in an independent cohort of the same size. The assay achieved >91% sensitivity with the specificity of 95%. Full details are planned to be released through a publication in 2022

  • MRD franchise update:

    • Formed a co-development agreement with AstraZeneca R&D China for personalized MRD tests for solid tumors in China. Our partner plans to incorporate the co-developed tests for China-specific studies. This is an exclusive, multi-year collaboration (see detailed release here)

    • Entered into an exclusive agreement with Fosun Pharma to commercialize Seq-MRD® in China, marking the Company’s first product launch for hematologic cancer and MRD detection

  • Publications:

    • Early Screening: Clinical results and technology findings of Genetron Health’s early liver cancer screening product for hepatocellular carcinoma (HCC), HCCscreen™, were included in an expert consensus and was published in the Chinese Journal of Hepatology, an influential publication among liver physicians in China

    • MRD: Journal of Hematology & Oncology published an analysis of a personalized MRD assay developed based on Mutation Capsule technology. The assay has shown excellent sensitivity to detect 0.001% tumor DNA from peritoneal lavage fluid samples for precise prediction of peritoneal dissemination in gastric cancer patients

    • Bioinformatics: Briefings in Bioinformatics published enhanced variant caller performance data that was achieved by Genetron Health’s bioinformatics team

  • Others:

    • Established a strategic partnership with NeoGenomics (Nasdaq: NEO) to drive global oncology drug R&D as well as with IMPACT Therapeutics to drive development of a synthetic lethal product pipeline

    • Obtained CE Mark for Onco PanScan™, the Company’s large panel product that covers over 800 genes

“Despite COVID’s impact on our third quarter financial results, we achieved strong year-over-year revenue growth of 36.2%, marked by more than 70% increase in our in-hospital (IVD) sales along with significant gross margin improvement. Operationally, we’ve had many positive updates, which included the initiation of our first registrational trial for HCC early screening, new MRD partnerships, and recognition in multiple influential publications,” remarked Mr. Sizhen Wang, co-founder and CEO of Genetron Health. “Based on the continued enforcement of “zero COVID” strategy in China, we anticipate a significantly tougher operating environment in the fourth quarter. Despite this short-term challenge, we remain laser focused on driving our clinically differentiated pipeline of comprehensive precision oncology diagnostics. Our long-term outlook remains unchanged as we continue to execute on our strategies, and we anticipate multiple data and trial updates from our key programs in the coming months. In addition, the macro environment remains favorable for Genetron, thanks to continued policy tailwinds in China that aim to improve healthcare options for local citizens.”

Third Quarter 2021 Unaudited Preliminary Financial Results
Total revenue for the third quarter of 2021 increased by 36.2% to RMB 152.5 million (US $23.7 million) from RMB 112.0 million in the same period of 2020.

Diagnosis and monitoring revenue increased by 42.2% to RMB 144.3 million (US $22.4 million) in the third quarter of 2021 from RMB 101.5 million in the same period of 2020. The increase was primarily driven by the growth in the revenue generated from the sale of both LDT & IVD products.

  • Revenue generated from the provision of LDT services increased by 30.2% to RMB 93.0 million (US $14.4 million) during the third quarter of 2021 from RMB 71.4 million in the same period of 2020, primarily driven by increased sales of HCC early screening tests. LDT diagnostic tests sold in the third quarter 2021 totaled approximately 5,900 units.

  • Revenue generated from sales of IVD products increased by 70.5% to RMB 51.3million (US $8.0 million) in the third quarter of 2021 from RMB 30.1 million in the third quarter of 2020. The increase was driven by sales of the Genetron S5 instrument and 8-gene Lung Cancer Assay (Tissue).

Contracted in-hospital partners
(as of the end of the period indicated)

3Q20

4Q20

1Q21

2Q21

3Q21

IVD In-hospital partners

20

22

23

28

29

3Q20

4Q20

1Q21

2Q21

3Q21

Total in-hospital partners(1)

38

40

42

50

54



Note:
(1) The number of total in-hospital partners include both sales of LDT services and IVD products.

Revenue generated from development services decreased by 21.4% to RMB 8.2 million (US $1.3 million) in the third quarter of 2021, from RMB 10.4 million in the same period of 2020. The decrease was mainly due to the decline in sequencing services, as the Company continued to focus on higher margin biopharmaceutical services. Biopharmaceutical revenue continued to grow compared to the same period of 2020.

Gross profit increased by 51.1% to RMB 105.2 million (US $16.3 million) in the third quarter 2021 from RMB 69.6 million in the same period of 2020. Gross margin improved to 69.0% for the third quarter of 2021, compared to 62.2% in the same period of 2020, primarily due to higher gross margins for both the LDT and IVD business lines.

Selling expenses increased by 56.3% to RMB 94.6 million (US $14.7 million) in the third quarter of 2021 from RMB 60.6 million in the same period of 2020. Selling expenses as a percentage of revenues was 62.0% in the third quarter of 2021, compared to 54.1% in the same period of 2020. The increase was primarily driven by increased headcount to expand Genetron’s core business as well as early screening sales teams.

Administrative expenses increased by 94.1% to RMB 63.0 million (US $9.8 million) in the third quarter of 2021 from RMB 32.4 million in the same period of 2020. Administrative expenses as a percentage of revenues increased to 41.3% in the third quarter of 2021 from 29.0% in the third quarter of 2020. The increase was mainly driven by higher headcount, professional fees, IT expenses, and share-based compensation.

Research and development expenses increased by 61.7% to RMB 62.4 million (US $9.7 million) in the third quarter of 2021 from RMB 38.6 million in the same period of 2020. Research and development expenses as a percentage of revenues increased to 40.9% in the third quarter of 2021 from 34.4% in the same period of 2020. The increases were driven by higher R&D headcount and related expenses, as well as continued innovation efforts, including product development and clinical trial activities.

Loss for the period was RMB 130.1 million (US $20.2 million) for the three months ended September 30, 2021, compared to RMB 48.0 million for the three months ended September 30, 2020.

Non-IFRS loss for the period, defined as loss for the period excluding share-based compensation expenses, fair value change and other loss of financial instruments with preferred rights, was RMB109.9 million (US $17.1 million) for the three months ended September 30, 2021, compared to RMB 43.7 million for the three months ended September 30, 2020. Please refer to the section in this press release titled "Non-IFRS Financial Measures" for details.

Basic loss per share attributable to ordinary shareholders of the Company was RMB 0.28 (US $0.04) for the third quarter of 2021, compared with a basic loss per share attributable to ordinary shareholders of the Company of RMB 0.11 for the same period of 2020.

Excluding share-based compensation expenses, fair value change of financial instruments with preferred rights and other loss of financial instruments with preferred rights, non-IFRS basic loss per share attributable to ordinary shareholders of the Company was RMB 0.24 (US $0.04) for the third quarter of 2021, compared with non-IFRS basic loss per share attributable to ordinary shareholders of the Company of RMB 0.10 for the same period of 2020.

Diluted loss per share attributable to ordinary shareholders of the Company is equivalent to basic loss per share attributable to ordinary shareholders of the Company. Each ADS represents of five ordinary shares, par value US $0.00002 per share. Please refer to the section in this press release titled "Non-IFRS Financial Measures" for details.

As of September 30, 2021, cash and cash equivalents, restricted cash and current financial assets at fair value through profit or loss were RMB 1,005.3 million (US $156.0 million).

2021 Financial Guidance
Based on the continued enforcement of the “zero COVID” strategy in China and the resulting sustained restrictions across Genetron’s major markets, the Company is revising its full year 2021 revenue guidance to be around RMB 530 million, representing approximately 24.9% growth over the Company’s full year 2020 revenue.

Conference Call
A conference call and webcast to discuss the results will be held at 8:30 a.m. U.S. Eastern Time on November 30, 2021 (or at 9:30 p.m. Beijing Time on November 30, 2021). Interested parties may listen to the conference call by dialing numbers below:

United States:

+1-332-208-9468

China Domestic:

400-820-5286

Hong Kong:

+852-3018-6771

International:

+65-6713-5590

Conference ID:

5848053

Participants are encouraged to dial into the call at least 15 minutes in advance due to high call volumes.

A replay will be accessible through December 7, 2021 by dialing the following numbers:

United States:

+1-855-452-5696

International:

+61-2-8199-0299

Conference ID:

5848053

A simultaneous webcast of the conference call will be available on the "News and Presentations" page of the Investors section of the Company's website. A replay of the webcast will be available for 30 days following the event. For more information, please visit ir.genetronhealth.com.

Exchange Rate Information
All translations made in the financial statements or elsewhere in this press release made from RMB into United States dollars (“US$”) are solely for convenience and calculated at the rate of US$1.00=RMB 6.4434, representing the exchange rate as of September 30, 2021, set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate, or at any other rate, on September 30, 2021.

Non-IFRS Financial Measures
The Company uses non-IFRS loss and non-IFRS loss per share attributable to ordinary shareholders of the Company for the year/period, which are non-IFRS financial measures, in evaluating its operating results and for financial and operational decision-making purposes. The Company believes that non-IFRS loss and non-IFRS loss per share attributable to ordinary shareholders of the Company help identify underlying trends in the Company's business that could otherwise be distorted by the effect of certain expenses that the Company includes in its loss for the year/period. The Company believes that non-IFRS loss and non-IFRS loss per share attributable to ordinary shareholders of the Company for the year/period provide useful information about its results of operations, enhances the overall understanding of its past performance and future prospects and allows for greater visibility with respect to key metrics used by its management in its financial and operational decision-making.

Non-IFRS loss and non-IFRS loss per share attributable to ordinary shareholders of the Company for the year/period should not be considered in isolation or construed as an alternative to operating profit, loss for the year/period or any other measure of performance or as an indicator of its operating performance. Investors are encouraged to review non-IFRS loss and non-IFRS loss per share attributable to ordinary shareholders of the Company for the year/period and the reconciliation to its most directly comparable IFRS measures. Non-IFRS loss and non-IFRS loss per share attributable to ordinary shareholders of the Company for the year/period presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company's data. The Company encourages investors and others to review its financial information in its entirety and not rely on a single financial measure.

Non-IFRS loss and non-IFRS loss per share attributable to ordinary shareholders of the Company for the year/period represent loss for the year/period excluding share-based compensation expenses, fair value change of financial instruments with preferred rights and other loss of financial instruments with preferred rights (if applicable).

Please see the “Unaudited Non-IFRS Financial Measures” included in this press release for a full reconciliation of non-IFRS loss for the year/period to loss for the year/period and non-IFRS loss per share attributable to ordinary shareholders of the Company for the year/period to loss per share attributable to ordinary shareholders of the Company for the year/period.

About Genetron Holdings Limited
Genetron Holdings Limited (“Genetron Health” or the “Company”) (Nasdaq: GTH) is a leading precision oncology platform company in China that specializes in cancer molecular profiling and harnesses advanced technologies in molecular biology and data science to transform cancer treatment. The Company has developed a comprehensive oncology portfolio that covers the entire spectrum of cancer management, addressing needs and challenges from early screening, diagnosis and treatment recommendations, as well as continuous disease monitoring and care. Genetron Health also partners with global biopharmaceutical companies and offers customized services and products. For more information, please visit ir.genetronhealth.com.

Safe Harbor Statement
This press release contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Statements that are not historical facts, including statements about the Company’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties, and a number of factors could cause actual results to differ materially from those contained in any forward-looking statement. In some cases, forward-looking statements can be identified by words or phrases such as “may”, “will,” “expect,” “anticipate,” “target,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the SEC. All information provided in this press release is as of the date of this press release, and the Company does not undertake any duty to update such information, except as required under applicable law.

Investor Relations Contact
US:
Hoki Luk
Head of Investor Relations
Email: hoki.luk@genetronhealth.com
Phone: +1 (408) 891-9255

Philip Trip Taylor
Vice President | Gilmartin Group
ir@genetronhealth.com

Media Relations Contact
Yanrong Zhao
Genetron Health
yanrong.zhao@genetronhealth.com

Edmond Lococo
ICR
Edmond.Lococo@icrinc.com
Mobile: +86 138-1079-1408
genetron.pr@icrinc.com


GENETRON HOLDINGS LIMITED

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS

For the three months ended

For the nine months ended

September 30, 2020

September 30, 2021

September 30, 2020

September 30, 2021

RMB’000

RMB’000

US$’000

RMB’000

RMB’000

US$’000

Revenue

111,963

152,541

23,674

290,541

385,087

59,765

Cost of revenue

(42,331

)

(47,306

)

(7,342

)

(114,448

)

(130,839

)

(20,306

)

Gross profit

69,632

105,235

16,332

176,093

254,248

39,459

Selling expenses

(60,558

)

(94,625

)

(14,686

)

(175,000

)

(242,812

)

(37,684

)

Administrative expenses

(32,440

)

(62,981

)

(9,774

)

(81,969

)

(162,161

)

(25,167

)

Research and development expenses

(38,556

)

(62,364

)

(9,679

)

(96,030

)

(168,500

)

(26,151

)

Net impairment losses on financial and contract assets

(1,107

)

(10,437

)

(1,620

)

(2,097

)

(23,741

)

(3,684

)

Other income/(loss) - net

3,819

334

52

(513

)

8,945

1,388

Operating expenses

(128,842

)

(230,073

)

(35,707

)

(355,609

)

(588,269

)

(91,298

)

Operating loss

(59,210

)

(124,838

)

(19,375

)

(179,516

)

(334,021

)

(51,839

)

Finance income

12,772

482

75

11,062

1,712

265

Finance costs

(1,560

)

(5,791

)

(898

)

(3,997

)

(5,022

)

(779

)

Finance income/(costs) - net

11,212

(5,309

)

(823

)

7,065

(3,310

)

(514

)

Fair value loss of financial instruments with preferred rights

-

-

-

(2,823,370

)

-

-

Loss before income tax

(47,998

)

(130,147

)

(20,198

)

(2,995,821

)

(337,331

)

(52,353

)

Income tax expense

-

-

-

-

-

-

Loss for the period

(47,998

)

(130,147

)

(20,198

)

(2,995,821

)

(337,331

)

(52,353

)

Loss attributable to:

Owners of the Company

(47,998

)

(128,974

)

(20,016

)

(2,995,821

)

(333,548

)

(51,766

)

Non-controlling interests

-

(1,173

)

(182

)

-

(3,783

)

(587

)

(47,998

)

(130,147

)

(20,198

)

(2,995,821

)

(337,331

)

(52,353

)

Loss per share attributable to ordinary shareholders of the Company

RMB

RMB

USD

RMB

RMB

USD

-Basic and diluted

(0.11

)

(0.28

)

(0.04

)

(12.02

)

(0.73

)

(0.11

)

Loss per ADS attributable to ordinary shareholders of the Company

-Basic and diluted

(0.53

)

(1.40

)

(0.22

)

(60.10

)

(3.63

)

(0.56

)

Shares used in loss per share attributable to ordinary shareholders of the Company computation:

-Basic and diluted

454,231,486

461,356,043

461,356,043

249,230,922

459,793,465

459,793,465

ADS used in loss per ADS attributable to ordinary shareholders of the Company computation:



-Basic and diluted

90,846,297

92,271,209

92,271,209

49,846,184

91,958,693

91,958,693

GENETRON HOLDINGS LIMITED

UNAUDITED NON-IFRS FINANCIAL MEASURE

For the three months ended

For the nine months ended

September 30, 2020

September 30, 2021

September 30, 2020

September 30, 2021

RMB’000

RMB’000

US$’000

RMB’000

RMB’000

US$’000

Loss for the period

(47,998

)

(130,147

)

(20,198

)

(2,995,821

)

(337,331

)

(52,353

)

Adjustments:

Share-based compensation

4,268

20,246

3,141

19,222

42,000

6,518

Fair value loss of financial instruments with preferred rights

-

-

-

2,823,370

-

-

Non-IFRS Loss

(43,730

)

(109,901

)

(17,057

)

(153,229

)

(295,331

)

(45,835

)

Attributable to:

Owners of the Company

(43,730

)

(108,728

)

(16,875

)

(153,229

)

(291,548

)

(45,248

)

Non-controlling interests

-

(1,173

)

(182

)

-

(3,783

)

(587

)

(43,730

)

(109,901

)

(17,057

)

(153,229

)

(295,331

)

(45,835

)

Non-IFRS loss per share attributable to ordinary shareholders of the Company

RMB

RMB

USD

RMB

RMB

USD

-Basic and diluted

(0.10

)

(0.24

)

(0.04

)

(0.61

)

(0.63

)

(0.10

)

Non-IFRS loss per ADS(5 ordinary shares equal to 1 ADS) attributable to ordinary shareholders of the Company

-Basic and diluted

(0.48

)

(1.18

)

(0.18

)

(3.07

)

(3.17

)

(0.49

)

Shares used in non-IFRS loss per share attributable to ordinary shareholders of the Company computation:

-Basic and diluted

454,231,486

461,356,043

461,356,043

249,230,922

459,793,465

459,793,465

ADS used in non-IFRS loss per ADS attributable to ordinary shareholders of the Company computation:

-Basic and diluted

90,846,297

92,271,209

92,271,209

49,846,184

91,958,693

91,958,693

GENETRON HOLDINGS LIMITED
UNAUDITED REVENUE AND SEGMENT INFORMATION

Diagnosis and monitoring

Diagnosis and monitoring

Development services

Total

- provision of LDT services

- sale of IVD products

RMB’000

RMB’000

RMB’000

RMB’000

Three months ended September 30, 2020

Revenue

71,406

30,110

10,447

111,963

Segment profit

49,212

18,439

1,981

69,632

Three months ended September 30, 2021

Revenue

92,993

51,338

8,210

152,541

Segment profit

65,022

39,159

1,054

105,235

Nine months ended September 30, 2020

Revenue

194,754

67,468

28,319

290,541

Segment profit

130,961

43,827

1,305

176,093

Nine months ended September 30, 2021

Revenue

251,959

110,431

22,697

385,087

Segment profit

175,723

75,693

2,832

254,248

GENETRON HOLDINGS LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As at December 31,2020

As at September 30,2021

RMB’000

RMB’000

US$’000

ASSETS

Non-current assets

Property, plant and equipment

76,891

85,441

13,260

Right-of-use assets

59,706

50,938

7,905

Intangible assets

12,265

15,104

2,344

Financial assets at fair value through profit or loss

19,609

37,005

5,743

Prepayments

15,362

23,765

3,688

Total non-current assets

183,833

212,253

32,940

Current assets

Inventories

24,971

41,657

6,465

Contract assets

1,112

2,217

344

Other current assets

36,500

26,513

4,115

Trade receivables

164,592

279,725

43,413

Other receivables and prepayments

42,420

83,188

12,911

Amounts due from related parties

214

453

70

Financial assets at fair value through profit or loss

140,294

187,398

29,084

Derivative financial instruments

196

673

104

Restricted cash

-

2,800

435

Cash and cash equivalents

1,375,766

815,142

126,508

Total current assets

1,786,065

1,439,766

223,449

Total assets

1,969,898

1,652,019

256,389

GENETRON HOLDINGS LIMITED

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS CONTINUED)

As at December 31,2020

As at September 30,2021

RMB’000

RMB’000

US$’000

LIABILITIES

Non-current liabilities

Borrowings

5,493

-

-

Lease liabilities

43,016

32,694

5,074

Other non-current liabilities

-

8,354

1,297

Total non-current liabilities

48,509

41,048

6,371

Current liabilities

Trade payables

34,071

38,907

6,038

Contract liabilities

8,417

12,640

1,962

Other payables and accruals

111,164

119,399

18,530

Amounts due to related parties

24

350

54

Borrowings

58,583

27,595

4,283

Lease liabilities

16,585

19,640

3,048

Derivative financial instruments

-

1,702

264

Total current liabilities

228,844

220,233

34,179

Total liabilities

277,353

261,281

40,550

Net assets

1,692,545

1,390,738

215,839

SHAREHOLDERS’ EQUITY

Equity attributable to owners of the Company

Share capital

59

60

9

Share premium

6,657,562

6,702,347

1,040,188

Other reserves

(24,701

)

(44,784

)

(6,950

)

Accumulated losses

(4,940,375

)

(5,273,923

)

(818,500

)

1,692,545

1,383,700

214,747

Non-controlling interests

-

7,038

1,092

Total shareholders’ equity

1,692,545

1,390,738

215,839


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