FAST NEWS: Genetron’s Losses Grow as Covid Restrictions Hurt Business

The latest: Cancer-screening device maker Genetron Holdings Ltd. (GTH.US) said on Thursday its revenue grew 9.6% year-on-year in the fourth quarter to 146.9 million yuan ($23 million). Its loss for the period more than doubled to 165.3 million yuan from 73.2 million yuan a year earlier.

Looking Up: The company had 58 hospital partners at the end of 2021, up nearly 50% from its 40 partners at the end of 2020. Such partners are crucial for a company like Genetron as they are often the final buyers and users of its sophisticated cancer screening devices.

Take Note: The company’s fourth-quarter revenue growth was far slower than the 25.3% growth for all of last year. Furthermore, the company forecast the slower revenue growth would continue this year. It predicted first-quarter revenue would rise 15% year-on-year, while revenue for the whole year would rise between 10% and 20%.

Digging Deeper: Genetron was established in 2013 and is one of a handful of Chinese startups, which also includes Burning Rock Biotech (BNR.US) and New Horizon Health (6606.HK), that make devices that can detect cancers in their early stages when they often show few symptoms and are easier to treat. Like many of its peers, the company said it has struggled with a “challenging operating environment” during the pandemic as many people avoided hospitals where many of its products are administered. At the same time, Genetron’s expenses are rising far faster than its revenue as it tries to expand its sales network and develop new products. Its R&D costs grew 61% in the fourth quarter year-on-year, while its selling expenses grew by 40% during the period. As a result, the company’s gross margin fell nearly 6 percentage points during the quarter to 57% from 62.8% a year earlier.

Market Reaction: Genetron’s shares fell nearly 7% in Tuesday trade after the results came out. The stock has lost nearly 90% of its value over the last year, and its latest close of $2.72 is near an all-time low.

Reporting by Doug Young

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