GlobeNewswire Inc | Nov 9, 2020 06:30AM EST

November 09, 2020

BEIJING, Nov. 09, 2020 (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 announced its unaudited financial results for the third quarter ended September30, 2020 and provided an update on recent developments.

Third Quarter 2020 Unaudited Financial and Recent Operating Highlights

-- Recorded total revenue of RMB112.0 million for the third quarter 2020, representing a 37.6% increase over the same period of 2019. -- Diagnosis and monitoring revenueincreased to RMB101.5 million in the third quarter 2020, representing a 45.0% increase over the same period of 2019. -- Gross margin improved to 62.2% for the third quarter 2020, compared to 44.2% in the same period of 2019. -- Received U.S. FDA breakthrough device designation for its blood-based NGS test, HCCscreenTM, for early detection of hepatocellular carcinoma in September 2020. -- Joined a major R&D project led by the Ministry of Science and Technology in China for early screening of lung and digestive system cancers. -- Entered into exclusive global licensing agreement with ImmuQuad Biotechnologies to develop and commercialize minimal residual disease (MRD) assays in hematologic cancer in October 2020. -- Launched clinical trial in China for companion diagnostic test in development for avapritinib with its strategic partner CStone Pharmaceuticals. -- Established partnership with dMed Biopharmaceuticals to pioneer a "one-stop" new drug research and development service offering and registration services in both China and the U.S. for biopharmaceutical companies. -- Presented data from 18 studies in conjunction with its collaborations at ESMO 2020.

Despite COVID-19 pandemics impact in some of our major markets in the third quarter, we continued to see robust top-line growth with 37.6% year-over-year increase, representing an acceleration from the 28.3% year-over-year growth seen in the first half of 2020. The upward sales momentum was accompanied by strong margin improvements and SG&A operational efficiencies, compared to the same period last year, remarked Mr. Sizhen Wang, co-founder and CEO of Genetron Health. Overall, we had an eventful quarter and made significant progress across all business lines, and we are very pleased with our operational accomplishments and financial results.

Looking ahead, although the pandemic has largely remained stable in China in the recent weeks, we remain vigilant regarding the situation. With that said, we are particularly encouraged by our IVD (in-vitro diagnostic) and early screening sales momentum and expect those to be the growth drivers heading into next year. Our strategic focus going forward will be to accelerate the development of liquid biopsy-based solutions across the full-cycle cancer management, particularly in early screening and MRD. In early screening for liver cancer, we plan to further ramp up our commercialization initiatives in China, while advancing the preparations to commence clinical trials in both China and the US. We are progressing on a case control early screening study for colorectal cancer as well and expect to report preliminary data in 2021. Genetron is also working on other MRD projects in solid tumors with an initial focus on liver and colorectal cancer. For biopharma services, our pipeline is looking strong thanks partly to our newly added MRD capability in hematologic cancer. We are confident that we would become a prominent player in the liquid biopsy space and are committed to bringing these innovative products to patients faster, concluded Mr. Wang.

Third Quarter 2020 Unaudited Financial ResultsTotal revenue for the third quarter 2020 increased by 37.6% to RMB112.0 million (US$16.5 million) from RMB81.3 million in the same period of 2019.

Diagnosis and monitoring revenueincreased by 45.0% to RMB101.5 million (US$15.0 million) in the third quarter 2020 from RMB70.0 million in the same period of 2019. The increase was driven by the growth in the revenues generated from both the provision of LDT services and the sale of IVD products.

-- Revenue generated from the provision of LDT services increased by 17.9% to RMB71.4 million (US$10.5 million) during the third quarter 2020 from RMB60.5 million in the same period of 2019. LDT diagnostic tests sold in the third quarter 2020 totaled approximately 5,900 units, representing an increase of 5% compared to the number of LDT diagnostic tests sold in the same period of 2019. The average selling price also increased compared to the same period in 2019, attributable to a shift to higher value products such as Genetron Healths Onco PanScan. In the third quarter, sales of LDT services included sales of our early screening test, HCCscreenTM, in the form of LDT services, which contributed to a small portion of total LDT revenue. -- Revenue generated from sale of IVD products increased by 217.3% to RMB30.1 million (US$4.4 million) in the third quarter 2020 from RMB9.5 million in the third quarter 2019. The increase was mainly driven by the increase in the number of assays and sequencing platforms sold in the third quarter 2020, notably the Genetron S5 instrument and Lung 8 Assay.

Contracted in-hospital partners

2019 1Q20 2Q20 3Q20IVD In-hospital partners 13 13 18 20 2019 1Q20 2Q20 3Q20Total in-hospital partners^(1) 25 26 35 38Note:(1) The number of total in-hospital partners include both sales of LDTservices and IVD products.

Revenue generated from development services decreased by 7.6% to RMB10.4 million (US$1.5 million) in the third quarter 2020, from RMB11.3 million in the same period of 2019. The change mainly resulted from the decrease in sequencing services, reflecting the adjustment of the Companys business strategy towards biopharmaceutical services and in the increased revenue from biopharmaceutical services recorded in the third quarter 2020.

Despite higher revenue, cost of revenue decreased by 6.8% to RMB42.3 million (US$6.2 million) for the three months ended September 30, 2020, compared to RMB45.4 million in the same period of 2019. These decreases were primarily due to economies of scale.

Gross profitincreased by 93.7% to RMB69.6 million (US$10.3 million) in the third quarter 2020 from RMB35.9 million in the same period of 2019. Gross margin increased to 62.2% for the third quarter of 2020, compared to 44.2% in the same period of 2019. Year-over-year gross margin improvements were seen across all major business lines, mainly attributable to improved scale, operational optimization, and better product mix.

Operating expenses increased by 7.4% to RMB128.8 million (US$19.0 million) for the three months ended September 30, 2020, from RMB120.0 million in the same period of 2019.

Selling expenses continued to decline, decreasing by 7.9% to RMB60.6 million (US$8.9 million) in the third quarter 2020 from RMB65.7 million in the same period of 2019. Selling expenses as a percentage of revenues decreased to 54.1% in the third quarter 2020 from 80.8% in the same period of 2019. These decreases were primarily due to increased sales productivity.

Administrative expenses decreased by 2.9% to RMB32.4 million (US$4.8 million) in the third quarter 2020 from RMB33.4 million in the same period of 2019. Administrative expenses as a percentage of revenues decreased to 29.0% in the third quarter 2020 from 41.1% in the third quarter 2019, reflecting the benefit of improved operational scale.

Research and development expenses increased by 85.8% to RMB38.6 million (US$5.7 million) in the third quarter 2020 from RMB20.8 million in the same period of 2019. The increase was driven by continued innovation efforts inclusive of development of new products and technologies, as well as clinical trial activities. Research and development expenses as a percentage of revenues increased to 34.4% in the third quarter of 2020 from 25.5% in the same period of 2019.

As a result of the above, operating loss decreased by 29.5% to RMB59.2 million (US$8.7 million) for the three months ended September 30, 2020, from RMB84.0 million for the three months ended September 30, 2019.

Finance income increased to RMB12.8 million (US$1.9 million) in the third quarter 2020 from RMB26,000 in the same period of 2019. The increase was driven by the foreign currency exchange gain.

Loss for the period was RMB48.0 million (US$7.1 million) for the three months ended September 30, 2020, compared to RMB274.1 million for the three months ended September 30, 2019.

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 RMB43.7 million (US$6.4 million) for the three months ended September 30, 2020, compared to RMB75.4 million for the three months ended September 30, 2019.

Basic loss per ordinary share was RMB0.11 (US$0.02) for the third quarter of 2020, compared with a basic loss per ordinary share of RMB2.15 for the same period of 2019. 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 ordinary share was RMB0.10 (US$0.01) for the third quarter of 2020, compared with non-IFRS basic loss per ordinary share of RMB0.59 for the same period of 2019. Diluted loss per ordinary share is equivalent to basic loss per ordinary share. Each ADS represents of five ordinary shares, par value US$0.00002 per share.

Cash, cash equivalents and financial assets at fair value were RMB1,868.5 million (US$275.2 million) as of September 30, 2020.

Conference CallA conference call and webcast to discuss the results will be held at 8:30 a.m. U.S. Eastern Time on November 9, 2020 (or at 9:30 pm Beijing Time on November 9, 2020). Interested parties may listen to the conference call by dialing numbers below:

United States: +1 845-675-0437China Domestic: 400-620-8038Hong Kong: +852-3018-6771International: +65-6713-5090Conference ID: 5248398

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

The replay will be accessible through December 9, 2020, by dialing the following numbers:

United States: +1-855-452-5696International: +61-2-8199-0299Conference ID: 5248398

A simultaneous webcast of the conference call will be available on the "News and Events" 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.

About Genetron Holdings LimitedGenetron 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 Companys 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 Companys 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.

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$1.00=RMB6.7896, representing the exchange rate as of September 30, 2020, set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate, or at any other rate, on September 30, 2020.

Non-IFRS Financial Measures The Company uses non-IFRS loss and non-IFRS loss per ordinary share 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 ordinary share 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 ordinary share 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 ordinary share 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 ordinary share for the year/period and the reconciliation to its most directly comparable IFRS measures. Non-IFRS loss and non-IFRS loss per ordinary share 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 ordinary share 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 Measure 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 ordinary share for the year/period to loss per ordinary share for the year/period.

Investor Relations ContactUS:Hoki LukHead of Investor RelationsEmail: hoki.luk@genetronhealth.comPhone: +1 (408) 891-9255

Stephanie CarringtonWestwicke, an ICR CompanyEmail: Stephanie.Carrington@westwicke.comOffice: +1 (646) 277-1282

Asia:Bill ZimaICR, Inc.Email: bill.zima@icrinc.comir@genetronhealth.com

Media Relations ContactEdmond LococoICREdmond.Lococo@icrinc.comMobile: +86 138-1079-1408pr@genetronhealth.com

GENETRON HOLDINGS LIMITEDUNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS

For the three months ended For the nine months ended September September 30, 2020 September September 30, 2020 30, 2019 30, 2019 RMB?000 RMB?000 US$?000 RMB?000 RMB?000 US$?000Revenue 81,344 111,963 16,490 220,485 290,541 42,792 Cost of (45,398 ) (42,331 ) (6,235 ) (121,315 ) (114,448 ) (16,856 )revenue Gross profit 35,946 69,632 10,255 99,170 176,093 25,936 Selling (65,716 ) (60,558 ) (8,919 ) (184,549 ) (175,000 ) (25,775 )expensesAdministrative (33,416 ) (32,440 ) (4,778 ) (88,471 ) (81,969 ) (12,073 )expensesResearch anddevelopment (20,752 ) (38,556 ) (5,679 ) (59,336 ) (96,030 ) (14,144 )expensesNet impairmentlosses onfinancial and (331 ) (1,107 ) (163 ) (736 ) (2,097 ) (309 )contractassetsOther income/ 259 3,819 562 11,813 (513 ) (75 )(loss) - net Operating (119,956 ) (128,842 ) (18,977 ) (321,279 ) (355,609 ) (52,376 )expenses Operating loss (84,010 ) (59,210 ) (8,722 ) (222,109 ) (179,516 ) (26,440 ) Finance income 26 12,772 1,881 438 11,062 1,629 Finance costs (2,134 ) (1,560 ) (230 ) (3,603 ) (3,997 ) (589 ) Finance(costs)/income (2,108 ) 11,212 1,651 (3,165 ) 7,065 1,040 - net Fair valueloss offinancial (187,955 ) - - (315,962 ) (2,823,370 ) (415,837 )instrumentswith preferredrights Loss before (274,073 ) (47,998 ) (7,071 ) (541,236 ) (2,995,821 ) (441,237 )income taxIncome tax - - - - - - expense Loss for the (274,073 ) (47,998 ) (7,071 ) (541,236 ) (2,995,821 ) (441,237 )period Lossattributable to:Owners of the (274,073 ) (47,998 ) (7,071 ) (541,236 ) (2,995,821 ) (441,237 )Company Loss per share RMB RMB USD RMB RMB USD -Basic and (2.15 ) (0.11 ) (0.02 ) (4.35 ) (12.02 ) (1.77 )diluted Loss per ADS -Basic and (0.53 ) (0.08 ) (60.10 ) (8.85 )diluted Shares used inloss per ordinary sharecomputation:-Basic and 127,274,280 454,231,486 454,231,486 124,286,433 249,230,922 249,230,922 dilutedADS used in loss per ADS ?? ?? ??computation: ??-Basic and 90,846,297 90,846,297 49,846,184 49,846,184 diluted

GENETRON HOLDINGS LIMITEDUNAUDITED NON-IFRS FINANCIAL MEASURE

For the three months ended For the nine months ended

September 30, September 30, 2020 September 30, September 30, 2020 2019 2019 RMB?000 RMB?000 US$?000 RMB?000 RMB?000 US$?000 Loss for the (274,073 ) (47,998 ) (7,071 ) (541,236 ) (2,995,821 ) (441,237 )periodAdjustments: Share-based 10,755 4,268 629 31,494 19,222 2,831 compensationFair valueloss offinancial 187,955 - - 315,962 2,823,370 415,837 instrumentswith preferredrights Non-IFRS Loss (75,363 ) (43,730 ) (6,442 ) (193,780 ) (153,229 ) (22,569 ) Attributable to:Owners of the (75,363 ) (43,730 ) (6,442 ) (193,780 ) (153,229 ) (22,569 )Company Non-IFRS loss RMB RMB USD RMB RMB USD per share-Basic and (0.59 ) (0.10 ) (0.01 ) (1.56 ) (0.61 ) (0.09 )diluted Non-IFRS lossperADS(5 ordinary shares equalto 1 ADS)-Basic and (0.48 ) (0.07 ) (3.07 ) (0.45 )diluted Shares used innon-IFRS lossper ordinary sharecomputation:-Basic and 127,274,280 454,231,486 454,231,486 124,286,433 249,230,922 249,230,922 diluted ADS used innon-IFRS loss per ADScomputation:-Basic and 90,846,297 90,846,297 49,846,184 49,846,184 diluted

GENETRON HOLDINGS LIMITEDUNAUDITED REVENUE AND SEGMENT INFORMATION

Diagnosis and Diagnosis and monitoring monitoring Development services Total - provision of - sale of IVD LDT services products RMB?000 RMB?000 RMB?000 RMB?000 Three months ended September 30, 2019 Revenue 60,542 9,490 11,312 81,344Segment profit/(loss) 34,605 2,707 (1,366 ) 35,946 Three months ended September 30, 2020 Revenue 71,406 30,110 10,447 111,963Segment profit 49,212 18,439 1,981 69,632 Nine months ended September 30, 2019 Revenue 169,285 14,434 36,766 220,485Segment profit/(loss) 101,533 4,576 (6,939 ) 99,170 Nine months ended September 30, 2020 Revenue 194,754 67,468 28,319 290,541Segment profit 130,961 43,827 1,305 176,093

GENETRON HOLDINGS LIMITEDUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

As at December As at September 30,2020 31,2019 RMB?000 RMB?000 US$?000 ASSETS Non-current assets Property, plant and equipment 83,013 73,500 10,825 Right-of-use assets 43,182 57,204 8,425 Intangible assets 5,482 9,453 1,392 Prepayments 12,679 11,975 1,765 Total non-current assets 144,356 152,132 22,407 Current assets Inventories 17,896 22,972 3,383 Contract assets 1,020 1,698 250 Other current assets 43,711 40,494 5,965 Trade receivables 83,757 128,013 18,854 Other receivables and prepayments 19,526 33,011 4,862 Amounts due from related parties 1,064 72 11 Financial assets at fair value through 122,224 233,534 34,396 profit or lossCash and cash equivalents 139,954 1,635,000 240,809 Total current assets 429,152 2,094,794 308,530 Total assets 573,508 2,246,926 330,937

GENETRON HOLDINGS LIMITEDUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS CONTINUED)

As at December As at September 30,202 31,2019 RMB?000 RMB?000 US$?000 LIABILITIES Non-current liabilities Financial instruments with preferred 2,106,334 - - rightsBorrowings 3,643 5,921 872 Lease liabilities 29,124 40,090 5,905 Total non-current liabilities 2,139,101 46,011 6,777 Current liabilities Trade payables 49,955 26,595 3,917 Contract liabilities 18,189 6,132 903 Other payables and accruals 109,683 263,576 38,821 Amounts due to related parties 34 - - Borrowings 19,514 53,097 7,820 Lease liabilities 15,363 15,459 2,277 Total current liabilities 212,738 364,859 53,738 Total liabilities 2,351,839 410,870 60,515 Net (liabilities)/assets (1,778,331 ) 1,836,056 270,422 SHAREHOLDERS? (DEFICIT)/EQUITY (Deficit)/equity attributable to owners of the CompanyShare capital 17 59 9 Share premium - 6,657,562 980,553 Treasury shares (3,578 ) - - Other reserves 69,207 18,233 2,685 Accumulated losses (1,843,977 ) (4,839,798 ) (712,825 ) Total shareholders? (deficit)/equity (1,778,331 ) 1,836,056 270,422