HARBIN, China, Nov. 17 /PRNewswire-Asia-FirstCall/ -- China Sky One Medical, Inc. ("China Sky One Medical" or "the Company") (Nasdaq: CSKI), a leading fully integrated pharmaceutical company in the People’s Republic of China ("PRC"), today announced record financial results for the third quarter of 2009.
Third Quarter 2009 Highlights
-- Total revenues increased 45.5% year-over-year to $43.2 million
-- Gross profit increased 44.8% year-over-year to $32.3 million
-- Operating income increased 27.8% to $16.1 million
-- Net income increased 25.3% year-over-year to $12.5 million, or $0.74
per diluted share
-- Obtained renewal of GMP certificate for Peng Lai Jin Chuang
Pharmaceutical Company subsidiary from the State Food and Drug
Administration ("SFDA") valid through June 2014
-- Appointed new independent director who serves as a member in the audit
committee
-- Submitted application to the SFDA to perform clinical trials for two
new eye drugs
-- Expanded international sales by exporting Pain Relief patches to Canada
-- Held first Annual Meeting of Shareholders on September 24th 2009 in
Harbin
"We are delighted to report another quarter of excellent results. We achieved record financial performance in the third quarter driven by strong product sales and the strength of our growing sales and distribution network. Sales of ointment and spray products increased as we promoted our skin-care products under the ‘Yu Fu’ brand. Sales of diversified products from our business acquisitions in 2008 also made a strong contribution to our third quarter results as we continued to execute our business strategy," said Mr. Yan-Qing Liu, Chairman and CEO of China Sky One Medical.
Third Quarter 2009 Results
Total revenues increased 45.5% year-over-year to $43.2 million for the three months ended September 30, 2009. The increase was primarily attributable to the strong performance of the Company’s larger sales team and great number of sales agents, as well as contributions from its business acquisitions in 2008.
Sales of patch products totaled $11.8 and accounted for 27.3% of revenue in the third quarter of 2009, versus $13.0 million and 43.6% of revenue for the same period last year due to a change in the Company’s marketing strategy after the acquisition of Heilongjiang Tianlong Pharmaceutical, Inc. and Peng Lai Jin Chuang Pharmaceutical Company to focus on certain of their products. Sales of ointments rose 38.0% year-over-year to $10.8 million, accounting for 25.0% of revenue, versus $7.8 million, or 26.4% of revenue a year ago. Sales of spray products approximately doubled to $6.8 million and accounted for 15.6% of revenue, versus 10.7% a year ago. The increase in spray products was primarily due to increased sales of mouth sprays resulting from the outbreak of the H1N1 virus. Sales of bio-engineering products, which comprise the Company’s three diagnostic testing kits, rose 8.5% year-over-year to $2.6 million, accounting for 6.1% of revenue. Sales of the Company’s other 48 products reached $11.2 million for the third quarter of 2009, compared to $3.3 million for its other same products in the same period last year. The higher sales in this category were mainly due to an increase in diversified products from the acquisitions of Heilongjiang Tianlong Pharmaceutical, Inc. and Peng Lai Jin Chuang Pharmaceutical Company in 2008.
Gross profit in the third quarter of 2009 was $32.3 million, an increase of 44.8% over the same period a year ago. Gross margin was 74.8% in the third quarter, a slight decrease compared to gross margin of 75.2% for the third quarter of 2008.
Operating expenses in the third quarter of 2009 were $16.3 million, up 66.8% from $9.8 million in the third quarter of 2008. The increase was mainly the result of higher research and development expenses associated with ongoing clinical trials for proposed products, the development of patents, licenses and other technologies acquired in 2008, and higher selling, general and administrative expenses primarily attributable to increased selling and marketing costs used to support the Company’s sales growth.
Operating income was $16.1 million for the third quarter of 2009, representing a 27.8% increase from $12.6 million in the third quarter of 2008. Operating margin was 37.1%, compared to 42.3% in the third quarter of 2008.
Provision for income taxes was $3.6 million in the third quarter of 2009, compared to $2.6 million in the same period last year.
Net income for the third quarter of 2009 was $12.5 million, or $0.74 per diluted share, compared to net income of $9.9 million, or $0.60 per diluted share, in the third quarter of 2008. Diluted earnings per share were calculated using a weighted average share count of 16.7 million in the third quarter of 2009, compared to 15.5 million a year ago.
Nine Month Operating Highlights
Total revenues for nine months ended September 30, 2009 increased 52.2% year-over-year to $100.2 million as a result of the Company’s expanded distribution channels and successful acquisitions. Gross margin was about 75.4% compared to 76.1% for the first nine months of 2008. Net income for the first nine months of 2009 reached $29.2 million, or $1.76 per diluted share, compared to net income of $21.9 million, or $1.39 per diluted share, in the same period of 2008.
Financial Condition
As of September 30, 2009, China Sky One Medical had $56.3 million in cash and cash equivalents, or $3.38 per common share outstanding, approximately $79.1 million in working capital, and no debt. Stockholders’ equity at September 30, 2009, was $124.4 million, a 31.1% increase over the $94.9 million recorded at December 31, 2008.
The Company generated $25.9 million in net cash flow from operating activities in the first nine months of 2009. As of September 30, 2009, the Company had spent approximately $9.9 million in constructing a new corporate headquarters in Harbin Song Bei New Development District. Construction is expected to be completed by the end of 2009. The estimated cost of this project is approximately $13 million. The Company is moving its administration offices and R&D laboratories to the new facility in November 2009. It is expected that this facility will also house a cord stem cell and tissue bank in the future. The Company believes that combining its operations into one centralized location will result in greater efficiency and will make it easier for management to conduct business activities. The company plans to fund the entire project using its internal funds.
Business Outlook and Guidance
"We are confident about the prospects for our business in 2009 and will continue to focus on increasing market share by both strengthening and further refining our sales and distribution network, building and enhancing our brand image, and seeking out strategic acquisitions that support our growth. In the first nine months of 2009, we increased our number of sales representatives to roughly 1,500 from 1,300. Currently, our products are sold in approximately 5,500 pharmacies in 24 provinces in China compared to 4,500 pharmacies in 22 provinces in 2008. Over the long term, we will continue to focus on developing and manufacturing our biological diagnostic kits and on our cord stem cell bank initiative, areas that we believe have very promising market opportunities," said Mr. Liu.
"Based on our progress so far this year, we are reaffirming our guidance for the year," added Mr. Liu. "We expect 2009 full year revenue to increase by 40%, or approximately $37.0 million, to $130 million, driven by growth in all of our product sales categories. We estimate that 2009 gross margin to be approximately 75%, which factors in market competition and possibly higher raw material costs. We expect 2009 net income will increase to approximately $39 million, resulting in net profit margin of approximately 30%."
Conference Call
The Company will conduct a conference call at 8:00 a.m. Eastern Standard Time on Tuesday, November 17, 2009, to discuss its third quarter of fiscal year 2009 financial results. Joining Mr. Liu will be Stanley Hao, Chief Financial Officer of China Sky One Medical Inc. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 1 888 419 5570. International callers should dial +1 617 896 9871. The Conference ID for this call is 814 194 70. If you are unable to participate in the call at this time, a replay will be available for fourteen days starting on Tuesday, November 17, 2009 at 10:00 a.m. Eastern Time. To access the replay, dial 888 286 8010, international callers dial 617 801 6888 The Conference Replay Passcode is 254 153 02.
About China Sky One Medical, Inc.
China Sky One Medical, Inc. is a holding company. The Company engages in the manufacturing, marketing and distribution of pharmaceutical, medicinal and diagnostic products. Through its wholly owned subsidiaries, Harbin Tian Di Ren Medical Science and Technology Company, Harbin First Bio-Engineering Company Limited, Heilongjiang Tianlong Pharmaceutical, Inc. and Peng Lai Jin Chuang Pharmaceutical Company the Company manufactures and distributes over-the-counter pharmaceutical products, which make up its major revenue source. For more information, visit http://www.cski.com.cn .
Safe Harbor Statement
Certain of the statements made in the press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward- looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding the progress of new product development and market conditions. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of a variety of factors, including the risks associated with the effect of changing economic conditions in The People’s Republic of China, variations in cash flow, reliance on collaborative retail partners and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products, and other risk factors detailed in reports filed with the Securities and Exchange Commission from time to time.
Financial Statements Below
China Sky One Medical, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
September 30, December 31,
2009 2008
(Unaudited) (Audited)
ASSETS
Current Assets
Cash and cash equivalents $56,303,043 $ 40,288,116
Accounts receivable, net 23,670,142 14,978,648
Inventories 3,099,451 462,351
Prepaid and other current assets 132,372 106,386
Land and construction deposit 8,533,952 8,513,284
Total current assets 91,738,960 64,348,785
Property and equipment, net 30,429,508 21,058,779
Intangible assets, net 14,872,618 15,851,765
$137,041,086 $101,259,329
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued
expenses $6,911,404 $2,937,068
Taxes payable 5,763,146 3,362,888
Deferred revenues -- 26,079
Total current liabilities 12,674,550 6,326,035
Commitments and Contingencies -- --
Stockholders’ Equity
Preferred stock ($0.001 par value,
5,000,000 shares authorized, none
issued and outstanding) -- --
Common stock ($0.001 par value,
50,000,000 shares authorized,
16,661,423 and 16,306,184 issued
and outstanding, respectively) 16,661 16,306
Additional paid-in capital 40,133,948 40,105,134
Accumulated other
comprehensive income 5,812,108 5,566,806
Retained earnings 78,403,819 49,245,048
Total stockholders’ equity 124,366,536 94,933,294
$137,041,086 $101,259,329
China Sky One Medical, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Revenues $43,227,171 $29,699,282 $100,242,453 $65,861,304
Cost of Goods Sold 10,897,185 7,366,059 24,690,474 15,748,801
Gross Profit 32,329,986 22,333,223 75,551,979 50,112,503
Operating Expenses
Depreciation and
amortization 447,170 308,023 1,347,836 523,375
Research and
development 4,884,925 1,866,409 10,979,619 3,881,312
Selling, general
and administrative 10,967,649 7,596,953 26,061,465 18,140,807
Total operating
expenses 16,299,744 9,771,385 38,388,920 22,545,494
Other Income
(Expense)
Other (expense) (483) -- (1,611) --
Interest income
(expense) 20,900 (1,494) 47,854 (135,136)
Total other
income (expense) 20,417 (1,494) 46,243 (135,136)
Net Income Before
Provision for
Income Tax 16,050,659 12,560,344 37,209,302 27,431,873
Provision for
Income Taxes
Current 3,591,719 2,616,909 8,050,531 5,512,860
Net Income $12,458,940 $9,943,435 $29,158,771 $21,919,013
Basic Earnings
Per Share $0.75 $0.64 $1.76 $1.50
Basic Weighted
Average Shares
Outstanding 16,655,697 15,464,084 16,535,924 14,657,059
Diluted Earnings
Per Share $0.74 $0.60 $1.76 $1.39
Diluted Weighted
Average Shares
Outstanding 16,741,745 16,492,414 16,606,576 15,745,542
Comprehensive
Income
Net Income $12,458,940 $9,943,435 $29,158,771 $21,919,013
Foreign currency
translation
adjustment 121,913 441,809 245,302 3,597,598
Comprehensive
Income $12,580,853 $10,385,244 $29,404,073 $25,516,611
China Sky One Medical, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended September 30,
2009 2008
Cash flows from operating
activities
Net Income $29,158,771 $21,919,013
Adjustments to reconcile net
cash provided by
operating activities:
Depreciation and amortization 1,752,927 523,375
Share-based compensation expense -- 30,351
Net change in assets and
liabilities
Accounts receivables (8,659,683) 1,618,365
Inventories (2,634,086) (1,431,757)
Prepaid expenses and other
current assets (14,948) (10,763)
Accounts payable and accrued
expenses 3,938,248 1,589,409
Taxes payable 2,390,378 2,475,042
Deferred revenues -- (24,504)
Net cash provided by
operating activities 25,931,607 26,688,531
Cash flows from investing
activities
Purchase of fixed assets (122,093) (784,137)
Purchase of
subsidiary-Tianlong and Haina -- (10,917,280)
Purchase of construction in
progress (9,926,849) --
Purchase of intangible assets -- (7,139)
Net cash used in investing
activities (10,048,942) (11,708,556)
Cash flows from financing
activities
Sale of common stock for
cash, net of offering costs -- 23,487,963
Proceeds from warrants
conversion 29,169 1,044,169
Net cash provided by
financing activities 29,169 24,532,132
Effect of exchange rate
changes on cash 103,091 2,245,553
Net increase in cash and
cash equivalents 16,014,926 41,757,660
Cash and cash equivalents at
beginning of period 40,288,117 9,190,870
Cash and cash equivalents at
end of period $56,303,043 $50,948,530
Supplemental disclosure of
cash flow information
Interest paid $-- $135,136
Taxes paid $6,569,901 $5,512,860
For more information, please contact:
Company Contact:
China Sky One Medical, Inc.
Mr. Stanley Hao, CFO
Tel: +86-0451-53994069
Email: stanleyhao@cski.com.cn
Investor Relations Contact:
CCG Investor Relations
Mr. Crocker Coulson, President
Tel: +1-646-213-1915
Email: crocker.coulson@ccgir.com
Web: http://www.ccgasiair.com
