The cancer diagnostics company’s revenue rose slightly in the third quarter, as its gross margin rose by nearly 4 percentage points
Key Takeaways:
Burning Rock’s revenue rose 2.3% in the third quarter, as declines for its core cancer diagnostic products were offset by a big rise for its R&D services
The company’s stock has tripled this year, including a 33% jump in the last week after its latest earnings announcement, as it moves closer to profitability
As we head into the end of a banner year for Chinese stocks, we’ll take a closer look at the latest earnings from cancer diagnostic company Burning Biotech Ltd. (NASDAQ:BNR), which is part of a small group whose shares have done especially well. We’ve previously called these stocks “China Easter Eggs,” because they seemed to be companies that had good growth prospects despite being neglected by investors.
But for Burning Rock, the case is less clear, since the company has been steadily losing money since its New York IPO in 2020, and its revenue wasn’t growing very fast. The best explanation for a tripling of its stock this year seems to be its enviably high gross margins, which are well ahead of global peers. But the company’s high operating expenses have kept Burning Rock squarely in the red.
The flow of red ink continued in the third quarter, though the company’s loss narrowed sharply, hinting that Burning Rock may finally make it to the promised land of profitability in the not-too-distant future. The company doesn’t seem in danger of a cash crunch anytime soon because a significant part of its expenses are from non-cash items like stock-based compensation and depreciation costs, giving investors one less thing to worry about.
Whatever the reason, investors certainly seemed to like the company’s latest financial report, released last week. The stock rose by about a third in the five trading days since then to reach a two-year high, giving it a market …
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