Genetron Holdings Limited

First-quarter 2022 total revenue increased 19.8% year over year to RMB110 million from RMB92 million. Diagnostics and monitoring revenue rose 14% to RMB100 million; LDT revenue increased 13.5% to RMB22 million; IVD revenue increased 18% to RMB18 million; and development services revenue increased 117% to RMB10.8 million. Gross profit was RMB62 million versus RMB55 million a year ago, and gross margin was 56% compared with 59% last year. Operating loss was RMB180 million, net loss was RMB175 million, and non-IFRS net loss was RMB164 million. Basic loss per ordinary share was RMB0.38 and non-IFRS basic loss per ordinary share was RMB0.35. Cash and cash equivalents plus current financial assets at fair value through profit and loss were RMB559 million as of March 31, 2022. For 2022, management maintained revenue guidance of about RMB585 million to RMB638 million, or roughly 10% to 20% growth versus 2021.

The CEO framed the quarter as productive despite a difficult operating backdrop, highlighting progress across early screening, MRD and CDx. He pointed to strategic milestones including the HUTCHMED CDx collaboration, CE Mark approvals for Seq-MRD and FusionScan Plus, and additional biopharma partnerships, while stressing that the company is focused on expanding adoption in reimbursed in-hospital channels. His tone was optimistic and long-term oriented, saying the organization build-out is largely complete and that improving operational excellence is now a priority to lift margins over time.

The CFO said first-quarter revenue was RMB110 million, up 19.8% year over year, with gross profit of RMB62 million and gross margin of 56% versus 59% a year ago. He attributed the margin pressure mainly to higher cost of revenue and promotional activities related to HCCscan, while noting IVD gross margin improved to around 50% from 34% on higher consumable sales. Operating expenses rose 48% to RMB241 million, led by selling expenses of RMB91 million and R&D expenses of about RMB80 million, contributing to an operating loss of RMB180 million and a net loss of RMB175 million. He also said cash and current financial assets totaled RMB559 million at quarter-end and reiterated full-year 2022 revenue guidance of RMB585 million to RMB638 million.

Analysts focused on how COVID lockdowns would affect second-quarter revenue and margins, and management said April was the weakest month so far, down around 30% year over year, with May improving but still negative double digit. They said LDT margins would also be pressured because much of the fixed cost base remains unchanged, though government-led COVID testing in Beijing could help utilize idle lab capacity and offset some costs. On AstraZeneca’s MRD collaboration, management said it is a co-development arrangement for a pan-cancer personalized MRD assay, with both sides investing in development and validation, and that Genetron owns the underlying platform IP while commercialization terms beyond trial use are still being finalized.