GlobeNewswire Inc | Aug 6, 2020 06:30AM EDT

August 06, 2020

BEIJING, Aug. 06, 2020 (GLOBE NEWSWIRE) -- Genetron Holdings Limited (Genetron Health or the Company) (Nasdaq: GTH), a leading precision oncology company in China that specializes in offering molecular profiling tests, today announced its unaudited financial results for the second quarter ended June30, 2020.

Second Quarter 2020 Unaudited Financial and Operating Highlights

-- Recorded total revenue of RMB101.7 million for the second quarter 2020, representing a 40.3% increase over the same period of 2019. -- Reported diagnosis and monitoring revenue of RMB 93.9 million for the second quarter 2020, representing a 52.1% increase from the same period of 2019. -- Reported gross margin improved to 63.1% for the second quarter 2020, compared to 47.8% in the same period of 2019. -- Presented data at theAmerican Association for Cancer Research (AACR) VirtualAnnual Meeting II that highlighted Genetron Healths industry-leading technological capability. -- Deepened collaboration with Thermo Fisher Scientific for joint marketing in China. -- Received US FDA approval for emergency use of Genetron SARS-CoV-2 RNA Test in June 2020. -- Strengthened the leadership team by appointing the former U.S. FDA senior officer, Yun-Fu Hu, PhD, as Chief Medical Officer. -- Successfully completed the initial public offering (IPO) in June 2020 and raised approximately US$235.0 million of net proceeds.

During the second quarter of 2020, our business rebounded as economic and social activities gradually resumed in China upon the easing of restrictions related to COVID-19. However, towards the later part of the second quarter, Beijing experienced a second wave of an outbreak, which has caused some negative impact on our business, remarked Mr. Sizhen Wang, co-founder and CEO of Genetron Health. Despite these challenges, we are pleased with our second quarter financial results as our robust top-line growth was accompanied by strong gross margins and an improved expense structure. This highlighted the resilience of Genetron Healths business and our solid execution in scaling our business.

Looking ahead to the second half of 2020, while we are confident about our fundamental business, and the strength of our balance sheet following our successful IPO, the COVID-19 pandemic continues to present uncertainties and challenges to all industry players, including us. We will continue to stay nimble in the face of changing market conditions, and our long term growth strategies also remain intact. We intend to continue to expand our product portfolio for diagnosis and monitoring, develop our high-value early screening pipeline assets, and to work with additional biopharmaceutical partners. It is our goal to focus on the creation of long term shareholder value as we expand our precision oncology platform, concluded Mr. Wang.

Second Quarter 2020 Unaudited Financial ResultsTotal revenue for the second quarter 2020 increased by 40.3% to RMB101.7 million (US$14.4 million) from RMB72.5 million in the same period of 2019.

Diagnosis and monitoring revenueincreased by 52.1% to RMB93.9 million (US$13.3 million) in the second quarter 2020 from RMB61.7 million in the same period of 2019. The increase was mainly 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 30.7% to RMB75.8 million (US$10.7 million) during the second quarter 2020 from RMB58.0 million in the same period of 2019. LDT diagnostic tests sold in the second quarter 2020 totaled approximately 6,700 units, representing an increase of 15% compared to the number of LDT diagnostic tests sold in the same period of 2019. The average selling price also increased, attributable to a shift to higher value products such as Genetron Healths Onco PanScan. -- Revenue generated from sale of IVD (In-vitro diagnostic) products increased by 381.4% to RMB18.1 million (US$2.6 million) in the second quarter 2020 from RMB3.8 million in the second quarter 2019. The increase was mainly driven by the increase in the number of assays and sequencing platforms sold in the second quarter 2020, notably the Genetron S5 instrument and Lung 8 Assay.

Revenue generated from development services decreased by 27.3% to RMB7.8 million (US$1.1 million) in the second quarter 2020, from RMB10.8 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 as reflected in the increased revenue from biopharmaceutical services recorded in the second quarter 2020.

Despite higher revenue, cost of revenue remained relatively stable at RMB37.5 million (US$5.3 million) for the three months ended June 30, 2020, compared to RMB37.8 million in the same period of 2019.

Gross profitincreased by 85.3% to RMB64.2 million (US$9.1 million) in the second quarter 2020 from RMB34.7 million in the same period of 2019. Gross margin increased to 63.1% for the second quarter of 2020, compared to 47.8% in the same period of 2019. The change was mainly attributable to the improved scale, operational optimization, and better product mix.

Operating expenses increased by 15.6% to RMB117.4 million (US$16.6 million) for the three months ended June 30, 2020, from RMB101.5 million in the same period of 2019.

Selling expenses decreased by 7.1% to RMB60.6 million (US$8.6 million) in the second quarter 2020 from RMB65.2 million in the same period of 2019. Selling expenses as a percentage of revenues decreased to 59.6% in the second quarter 2020 from 90.0% in the same period of 2019. These decreases were primarily due to improvement in sales productivity, and limited travel and marketing activities amid the COVID-19 impact.

Administrative expenses increased by 0.2% to RMB27.9 million (US$4.0 million) in the second quarter 2020 from RMB27.8 million in the same period of 2019. Administrative expenses as a percentage of revenues decreased to 27.4% in the second quarter 2020 from 38.4% in the second quarter 2019, reflecting the benefit of improved operational scale.

Research and development expenses increased by 55.7% to RMB29.8 million (US$4.2 million) in the second quarter 2020 from RMB19.2 million in the same period of 2019. The increase was driven by continued innovation efforts inclusive of development of new products and technologies. Research and development expenses as a percentage of revenues increased to 29.3% in the second quarter of 2020 from 26.4% in the same period of 2019.

Other income-net was RMB1.3 million (US$0.2 million) in the second quarter of 2020, decreased from RMB10.5 million in the same period of 2019. The decrease was mainly due to reduced government subsidies.

As a result of the above, operating loss decreased by 20.6% to RMB53.1 million (US$7.5 million) for the three months ended June 30, 2020, from RMB66.9 million for the three months ended June 30, 2019.

The Company recorded RMB2,778.6 million (US$393.3 million) and RMB67.8 million in fair value loss of financial instruments with preferred rights for the three months ended June 30, 2020 and 2019, respectively. The fair value loss of financial instruments with preferred rights was primarily attributable to the change in the fair value of preferred shares. Preferred shares were attached with certain key preferred rights, including anti-dilution rights, liquidation preference and redemption rights. With the significant increase of valuation immediately prior to the IPO during the second quarter of 2020, the fair value loss of financial instruments with preferred rights recorded in the same quarter increased significantly. At the completion of the IPO, all preferred shares were converted to ordinary shares. As a result, in compliance with IFRS, the carrying value of the financial instruments with preferred rights under non-current liabilities was derecognized and the same amount was recorded into total shareholders equity. In the future, the fair value loss of financial instruments will no longer reoccur.

Net loss for the period was RMB2,832.4 million (US$400.9 million) for the three months ended June 30, 2020, compared to RMB135.7 million for the three months ended June 30, 2019.

Non-IFRS net loss for the period, defined as net loss for the period excluding share-based compensation expenses, fair value change and other loss of financial instruments with preferred rights, was RMB43.9 million (US$6.2 million) for the three months ended June 30, 2020, compared to RMB58.8 million for the three months ended June 30, 2019.

Basic net loss per ordinary share was RMB17.04 (US$2.41) for the second quarter of 2020, compared with a basic net loss per ordinary share of RMB1.09 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 net loss per ordinary share was RMB0.26 (US$0.04) for the second quarter of 2020, compared with non-IFRS basic net loss per ordinary share of RMB0.47 for the same period of 2019. Diluted net loss per ordinary share is equivalent to basic net 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 RMB1,891.3 million (US$267.7 million) as of June 30, 2020. In June 2020, Genetron Health completed its IPO and raised approximately US$235.0 million of net proceeds after deducting underwriting discounts and commissions and estimated offering expenses payable.

Conference CallA conference call and webcast to discuss the results will be held at 8:30 a.m. U.S. Eastern Time on August 6, 2020 (or at 8:30 pm Beijing Time on August 6, 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: 1969177

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 September 6, 2020, by dialing the following numbers:

United States: +1-646-254-3697International: +61-2-8199-0299Conference ID: 1969177

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 StatementThis 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 InformationAll 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$1.00=RMB7.0651, representing the exchange rate as of June 30, 2020, set forth in the H.10 statistical release of the U.S. Federal Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted, realized or settled into US$ at that rate, or at any other rate, on June 30, 2020.

Non-IFRS Financial MeasuresThe Company uses non-IFRS net loss and non-IFRS net 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 net loss and non-IFRS net 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 net loss and non-IFRS net 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 net loss and non-IFRS net loss per ordinary share for the year/period should not be considered in isolation or construed as an alternative to operating profit, net 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 net loss and non-IFRS net loss per ordinary share for the year/period and the reconciliation to its most directly comparable IFRS measures. Non-IFRS net loss and non-IFRS net 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 net loss and non-IFRS net loss per ordinary share for the year/period represent net 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 net loss for the year/period to net loss for the year/period and non-IFRS net loss per ordinary share for the year/period to net 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 LIMITED UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF LOSS For the three months ended For the six months ended June 30, 2019 June 30, 2020 June 30, 2019 June 30, 2020 RMB?000 RMB?000 US$?000 RMB?000 RMB?000 US$?000 Revenue 72,490 101,735 14,400 139,141 178,578 25,276 Cost of (37,832 ) (37,512 ) (5,309 ) (75,917 ) (72,117 ) (10,207 )revenue Gross profit 34,658 64,223 9,091 63,224 106,461 15,069 --------- --------- --------- --------- --------- ---------Selling (65,248 ) (60,618 ) (8,580 ) (118,833 ) (114,442 ) (16,198 )expensesAdministrative (27,848 ) (27,906 ) (3,950 ) (55,055 ) (49,529 ) (7,010 )expensesResearch anddevelopment (19,168 ) (29,845 ) (4,224 ) (38,584 ) (57,474 ) (8,135 )expensesNet impairmentlosses onfinancial and 244 (267 ) (38 ) (405 ) (990 ) (140 )contractassetsOther income/ 10,471 1,270 180 11,554 (4,332 ) (613 )(loss) - net Operating (101,549 ) (117,366 ) (16,612 ) (201,323 ) (226,767 ) (32,096 )expenses Operating loss (66,891 ) (53,143 ) (7,521 ) (138,099 ) (120,306 ) (17,027 ) --------- --------- --------- --------- --------- ---------Finance income 84 198 28 412 228 32 Finance costs (1,068 ) (827 ) (117 ) (1,469 ) (4,375 ) (619 ) Finance costs (984 ) (629 ) (89 ) (1,057 ) (4,147 ) (587 )- net Fair valueloss offinancial (67,813 ) (2,778,591 ) (393,284 ) (128,007 ) (2,823,370 ) (399,622 )instrumentswith preferredrights Loss before (135,688 ) (2,832,363 ) (400,894 ) (267,163 ) (2,947,823 ) (417,236 )income tax Income tax - - - - - - expense Loss for the (135,688 ) (2,832,363 ) (400,894 ) (267,163 ) (2,947,823 ) (417,236 )period Lossattributable to:Owners of the (135,688 ) (2,832,363 ) (400,894 ) (267,163 ) (2,947,823 ) (417,236 )Company Loss per share RMB RMB USD RMB RMB USD -Basic and (1.09 ) (17.04 ) (2.41 ) (2.18 ) (20.25 ) (2.87 )diluted Loss per ADS -Basic and (85.22 ) (12.06 ) (101.23 ) (14.33 )diluted Shares used inloss per ordinary sharecomputation:-Basic and 124,268,051 166,179,400 166,179,400 122,767,748 145,604,263 145,604,263dilutedADS used inloss per ADScomputation:-Basic and 33,235,880 33,235,880 29,120,853 29,120,853diluted

GENETRONHOLDINGS LIMITED UNAUDITED NON-IFRSFINANCIAL MEASURES For the three months ended, For the six months ended, June 30, June 30, June 30, June 30, 2019 2020 2019 2020 RMB?000 RMB?000 US$?000 RMB?000 RMB?000 US$?000 Loss for the (135,688 ) (2,832,363 ) (400,894 ) (267,163 ) (2,947,823 ) (417,236 ) periodAdjustments: Share-based 9,124 9,903 1,402 20,739 14,954 2,117 compensationFair valueloss offinancialinstruments 67,813 2,778,591 393,284 128,007 2,823,370 399,622 withpreferredrights Non-IFRS Net (58,751 ) (43,869 ) (6,208 ) (118,417 ) (109,499 ) (15,497 ) Loss Attributable to:Owners of (58,751 ) (43,869 ) (6,208 ) (118,417 ) (109,499 ) (15,497 ) the Company Non-IFRSloss per RMB RMB USD RMB RMB USD share-Basic and (0.47 ) (0.26 ) (0.04 ) (0.96 ) (0.75 ) (0.11 ) diluted Non-IFRSloss perADS(5ordinary sharesequal to 1ADS)-Basic and (1.32 ) (0.19 ) (3.76 ) (0.53 ) diluted Shares usedin non-IFRSloss per ordinarysharecomputation:-Basic and 124,268,051 166,179,400 166,179,400 122,767,748 145,604,263 145,604,263 diluted ADS used innon-IFRS loss per ADScomputation:-Basic and 33,235,880 33,235,880 29,120,853 29,120,853 diluted

GENETRON HOLDINGS LIMITED UNAUDITED REVENUE AND SEGMENT INFORMATION Diagnosisand Diagnosisand monitoring monitoring Development - provision - sale of services Total of LDT IVD services products RMB?000 RMB?000 RMB?000 RMB?000 Three months ended June 30, 2019Revenue 57,967 3,769 10,754 72,490 Segment profit/(loss) 36,499 1,344 (3,185 ) 34,658 Three months ended June 30, 2020Revenue 75,772 18,145 7,818 101,735 Segment profit 53,094 10,040 1,089 64,223 Six months ended June 30, 2019Revenue 108,743 4,944 25,454 139,141 Segment profit/(loss) 66,928 1,869 (5,573 ) 63,224 Six months ended June 30, 2020Revenue 123,348 37,358 17,872 178,578 Segment profit/(loss) 81,749 25,388 (676 ) 106,461

GENETRON HOLDINGS LIMITED UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS As at December As at June 30, 2020 31, 2019 RMB?000 RMB?000 US$?000 ASSETS Non-current assets Property, plant and equipment 83,013 75,397 10,672 Right-of-use assets 43,182 37,140 5,257 Intangible assets 5,482 6,604 935 Prepayments 12,679 9,841 1,393 Total non-current assets 144,356 128,982 18,257 Current assets Inventories 17,896 18,192 2,575 Contract assets 1,020 886 125 Other current assets 43,711 39,698 5,619 Trade receivables 83,757 98,640 13,962 Other receivables and prepayments 19,526 14,843 2,100 Amounts due from related parties 1,064 827 117 Financial assets at fair value 122,224 47,722 6,755 through profit or lossCash and cash equivalents 139,954 1,843,531 260,935 Total current assets 429,152 2,064,339 292,188 Total assets 573,508 2,193,321 310,445 As at December As at June 30, 2020 31, 2019 RMB?000 RMB?000 US$?000 LIABILITIES Non-current liabilities Financial instruments with 2,106,334 - - preferred rightsBorrowings 3,643 1,820 258 Lease liabilities 29,124 23,538 3,332 Total non-current liabilities 2,139,101 25,358 3,590 Current liabilities Trade payables 49,955 37,940 5,369 Contract liabilities 18,189 5,619 795 Other payables and accruals 109,683 101,282 14,337 Amounts due to related parties 34 34 5 Borrowings 19,514 49,176 6,960 Lease liabilities 15,363 18,188 2,574 Total current liabilities 212,738 212,239 30,040 Total liabilities 2,351,839 237,597 33,630 Net (liabilities)/assets (1,778,331 ) 1,955,724 276,815 SHAREHOLDERS? (DEFICIT)/EQUITY (Deficit)/equity attributable to owners of the CompanyShare capital 17 59 8 Share premium - 6,657,562 942,317 Treasury shares (3,578 ) (2,374 ) (336 ) Other reserves 69,207 92,277 13,061 Accumulated losses (1,843,977 ) (4,791,800 ) (678,235 ) Total shareholders? (deficit)/equity (1,778,331 ) 1,955,724 276,815