XIANYANG, China, November 15, 2011 /PRNewswire-Asia-FirstCall/ -- Biostar Pharmaceuticals, Inc. (NASDAQ GM: BSPM) ("Biostar" or "the Company"), a developer, manufacturer and marketer of pharmaceutical and health supplement products for a variety of diseases and conditions, today announced its financial results for the third quarter and nine months ended September 30, 2011.
Third Quarter 2011 vs. 2010
Nine Months 2011 vs. 2010
Ronghua Wang, Biostar's Chief Executive Officer and Chairman commented, "Net sales for 2011 third quarter and nine months increased by approximately 23% and 27%, respectively, as compared to the same periods of 2010, due to our ongoing efforts to gain market share in our current locations as well as to expand our operations into new provinces."
Mr. Wang continued, "Of note, 2011 third quarter net sales decreased by 4.4% compared to the 2011 second quarter, primarily due to lower sales of our flagship product Xin Aoxing Capsule and the Tianqi Dysmenorrhea Capsule, and Taohuasan Pediatrics Medicine, due primarily to increased competition. To deal with increased competition facing our Xin Aoxing Capsule, at the end of the second quarter of 2011 we started a "Buy 3 Get 1 Free" promotion and as a result, third quarter sales volume increased, but net sales in dollar value slightly decreased as compared to the 2011 second quarter. Despite this anomaly, Xin Aoxing Capsule continues to be our main growth catalyst, as net sales for 2011 third quarter and nine months increased by 26% (to $16.3 million or 66% of total net sales) and 28% (to $44.5 million of 68% of total net sales), from the respective periods in 2010. Net sales from rural markets were approximately $4.8 million and $11.5 million for the three and nine months ended September 30, 2011, respectively, an increase of 34% and 32% compared to the same periods of 2010. Our goal is to enhance our marketing efforts in rural markets where there is less competition and more patients in need of our pharmaceutical and health products."
Mr. Wang noted, "Our gross margin for both the third quarter and nine month periods decreased due to a significant increase in raw materials costs, especially those used in Taohuasan Pediatrics Medicine, Danshen Granule, and Tianqi Dysmenorrhea Capsule. The Xin Aoxing Capsule gross margin remained constant at more than 80%. We have taken steps to control the cost and quality of our raw materials by planting and growing 13 herbs at our 82 acre plantation in Qinling Mountains. Two of the herbs, salvia miltiorrhiza and honeysuckle, have been harvested and are being used as raw materials; other herbs should be ready for harvest in 2012."
Mr. Wang added, "Due to higher advertising expenditures, total selling expenses in dollar value for both reporting periods increased; as a percentage of net sales, selling expenses for the third quarter decreased slightly to 42% as compared to 43% in the same period of last year, and for the nine month period increased less than two percentage points to 41%. General and administrative expenses as a percentage of net sales decreased in the third quarter due to better efficiency achieved by economies of scale; general and administrative expenses as a percentage of net sales for the 2011 nine month period increased due to approximately $1.1 million of stock-based compensation awarded to employees during the second quarter of 2011."
Biostar's CFO, Zack Pan noted, "Our balance sheet remains strong. Total current assets at September 30, 2011 were $59.6 million vs. total current liabilities of $11.3 million for a 5.3:1 current ratio. We continue to fund our business from our free cash flow. As of September 30, 2011, we had cash and cash equivalents of approximately $24.0 million. Net cash provided by operating activities through September 30, 2011 was approximately $11.8 million; net cash used by investing activities for the nine months ended September 30, 2011 was approximately $2.3 million. We believe our existing cash and cash equivalents are sufficient to fund our current operations."
Mr. Wang added, "We continue to execute our strategy to grow our Company organically and through acquisitions. On the organic side, during the first nine months of 2011 we have expanded our geographic coverage by adding three new provinces into our network, for a total of 25 provinces, and have increased our rural presence in the province of Shaanxi to over 11,800 sales outlets. To further increase our market share, we have expanded our sales force to over 300 people and increased our advertising spending. Additionally, we continue to invest in the development of several innovative products. Our team of 30 scientists and researchers continues to develop new products and we currently have seven OTC products and prescription drugs in our pipeline. Clinical trials for all seven have been completed and await State Food and Drug Administration approval."
Mr. Wang concluded, "In addition, we recently completed the acquisition of Shaanxi Weinan for an aggregate cash price of RMB 61 million (approximately $9.62 million). This acquisition increased our portfolio of drug approvals and permits by an additional 86 drugs (60 prescription drugs and 26 OTC drugs) and one health product. Currently, we are manufacturing seven products at Shaanxi Weinan's facilities and we plan to start manufacturing four more in early 2012. As previously announced, we expect to generate at least $5 million in net sales in 2012 from the newly acquired product line."
Reaffirming 2011 Guidance
Biostar reaffirmed its previously announced 2011 guidance for top-line growth of 20-25%. By year end, the Company expects to have 13,000 rural sales outlets, an increase of 3,000 from 2010 year-end.
Conference Call
Interested parties may participate in the call by dialing (480) 629-9857. Please call in 10 minutes before the conference is scheduled to begin and ask for the Biostar call or use pass code 4487920. After opening remarks, there will be a question and answer period. Questions may be asked during the live call, or alternatively, you may e-mail questions in advance to lcati@equityny.com.
The conference call will also be broadcast live over the Internet. To listen to the webcast, please go to http://viavid.net/dce.aspx?sid=00009006 or visit Biostar's website http://www.biostarpharmaceuticals.com and then to Investors page where the conference call is posted. Please go to the website at least 15 minutes early to register, and download and install any necessary audio software. If you are unable to listen live, the conference call will be archived and can be accessed for approximately 90 days. We suggest listeners use Microsoft Internet Explorer as their web browser.
Replay will be available until 11:59 pm E.T. November 22, 2011. To listen, please call (858) 384-5517 and use pass code 4487920.
About Biostar Pharmaceuticals, Inc.
Biostar Pharmaceuticals, Inc., through its wholly owned subsidiary and controlled affiliate in China, develops, manufactures and markets pharmaceutical and health supplement products for a variety of diseases and conditions. The Company's most popular product is its Xin Aoxing Oleanolic Acid Capsule, an over-the-counter ("OTC") medicine for chronic hepatitis B, a disease affecting approximately 10% of the Chinese population. For more information please visit: http://www.biostarpharmaceuticals.com.
Safe Harbor relating to the Forward-Looking Statements
Certain statements in this release concerning our future growth prospects are forward-looking statements, within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The company uses words and phrases such as "guidance," "forecasted," "projects," "is expected," "remain confident," "will" and similar expressions to identify forward-looking statements in this press release, including forward-looking statements. Undue reliance should not be placed on forward-looking information. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by Biostar and described in the forward-looking information contained in this news release. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the Company's ability to complete this acquisition, its ability to capitalize on the market opportunities presented by such acquisition, regulatory and other related approvals relating to the proposed acquisition, the Company's ability to integrate the recently acquired Shaanxi Weinan product lines into the Company's current product line and current operations, its ability to complete the audit and other closing conditions relating to the proposed acquisition, success of our investments, risks and uncertainties regarding fluctuations in earnings, our ability to sustain our previous levels of profitability including on account of our ability to manage growth, intense competition, wage increases in China, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, our ability to successfully complete and integrate potential acquisitions, withdrawal of governmental fiscal incentives, political instability and regional conflicts and legal restrictions on raising capital or acquiring companies outside China. Additional risks that could affect our future operating results are more fully described in our United States Securities and Exchange Commission filings including our most recent Annual Report on Form 10-K for the year ended December 31, 2010, and other subsequent filings. These filings are available at www.sec.gov. We may, from time to time, make additional written and oral forward-looking statements, including statements contained in our filings with the Securities and Exchange Commission and our reports to shareholders. We do not undertake to update any forward-looking statements that may be made from time to time by or on our behalf.
For more information contact: | ||
BioStar Pharmaceuticals, Inc. | The Equity Group, Inc. | |
Zack Pan, CFO | Lena Cati | |
Tel: 405-996-8829 | Tel: 212 836-9611 | |
Email: zpan@aoxing-group.com | Email: lcati@equityny.com | |
~ FINANCIAL TABLES FOLLOW ~
BIOSTAR PHARMACEUTICALS, INC. | |||||||||
Three Months Ended Sept. 30, | Nine Months Ended Sept. 30, | ||||||||
2011 | 2010 | 2011 | 2010 | ||||||
Sales, net | $ 24,779,420 | $ 20,178,617 | $65,980,481 | $51,937,483 | |||||
Cost of sales | 7,465,966 | 5,464,806 | 19,352,264 | 13,310,108 | |||||
Gross profit | 17,313,454 | 14,713,811 | 46,628,217 | 38,627,375 | |||||
Operating expenses: | |||||||||
Selling expenses | 10,391,335 | 8,673,251 | 26,908,239 | 20,334,068 | |||||
General and administrative expenses | 983,778 | 1,218,155 | 4,103,154 | 2,805,506 | |||||
Total operating expenses | 11,375,113 | 9,891,406 | 31,011,393 | 23,139,574 | |||||
Income from operations | 5,938,341 | 4,822,405 | 15,616,824 | 15,487,801 | |||||
Other income (expense) | |||||||||
Interest income | 127,423 | 3,001 | 271,737 | 9,681 | |||||
Other income | 272 | 63 | 821 | 387 | |||||
Interest expense | (2,984) | (6,031) | (10,371) | (6,914) | |||||
Other expenses | - | - | - | (193,131) | |||||
Foreign exchange loss | - | - | - | (5,641) | |||||
Total other income (expense) | 124,711 | (2,967) | 262,187 | (195,618) | |||||
Income before income taxes | 6,063,052 | 4,819,438 | 15,879,011 | 15,292,183 | |||||
Provision for income taxes | 1,599,316 | 1,385,984 | 4,539,127 | 4,016,359 | |||||
Net income | $4,463,737 | $3,433,454 | $11,339,884 | $11,275,824 | |||||
Net income per common stock | |||||||||
Basic | $ 0.16 | $ 0.13 | $ 0.41 | $ 0.43 | |||||
Diluted | $ 0.16 | $ 0.13 | $ 0.41 | $ 0.41 | |||||
Weighted average number of common stocks outstanding | |||||||||
Basic | 28,196,627 | 26,866,009 | 27,792,312 | 26,099,226 | |||||
Diluted | 28,196,627 | 27,400,243 | 27, 792,312 | 27,404,108 | |||||
BIOSTAR PHARMACEUTICALS, INC. | ||||
September 30, | December 31, | |||
2011 | 2010 | |||
(Unaudited) | ||||
ASSETS | ||||
Current Assets | ||||
Cash and cash equivalents | $ 24,006,839 | $ 13,211,443 | ||
Accounts receivable | 32,465,054 | 28,535,712 | ||
Inventories | 1,812,468 | 351,682 | ||
Prepaid expenses and other receivables | 1,309,895 | 1,251,397 | ||
Total Current Assets | 59,594,256 | 43,350,234 | ||
Deposits | 10,174,532 | 7,713,482 | ||
Property and equipment, net | 5,899,938 | 5,958,636 | ||
Intangible assets, net | 10,832,510 | 11,064,591 | ||
Total Assets | $ 86,501,236 | $ 68,086,943 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current Liabilities | ||||
Accounts and other payables | $ 6,129,668 | $ 3,991,071 | ||
Value-added tax payable | 851,051 | 1,509,173 | ||
Income tax payable | 3,521,981 | 2,086,702 | ||
Short term bank loan | 782,656 | - | ||
Total Current Liabilities | 11,285,356 | 7,586,946 | ||
Commitment and contingencies | ||||
Stockholders' Equity | ||||
Common stock, $.001 par value, 100,000,000 shares authorized, | ||||
28,196,627 and 27,387,436 shares issued and outstanding at September 30, 2011 and December 31, 2010 | 28,196 | 27,387 | ||
Additional paid-in capital | 22,348,271 | 20,706,667 | ||
Statutory reserve | 4,666,381 | 4,666,381 | ||
Retained earnings | 44,464,424 | 33,124,540 | ||
Accumulated other comprehensive income | 3,708,608 | 1,975,022 | ||
Total Stockholders' Equity | 75,215,880 | 60,499,997 | ||
Total Liabilities and Stockholders' Equity | $ 86,501,236 | $ 68,086,943 | ||
BIOSTAR PHARMACEUTICALS, INC. Unaudited Condensed Consolidated Statements of Cash Flows Unaudited | ||||
Nine Months Ended September 30, | ||||
2011 | 2010 | |||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net income | $ 11,339,884 | $ 11,275,824 | ||
Adjustments to reconcile net income to net cash | ||||
provided by operating activities: | ||||
Depreciation and amortization | 396,267 | 426,708 | ||
Stock-based compensation and other non-cash expenses | 1,642,413 | 520,416 | ||
Make good shares expense | - | 187,000 | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | (2,931,921) | (2,230,422) | ||
Inventories | (1,448,494) | (410,907) | ||
Prepaid expenses and other receivables | (14,757) | (1,094,364) | ||
Accounts payable and accrued expenses | 1,999,095 | (566,204) | ||
Value-added tax payable | (710,873) | 81,928 | ||
Income tax payable | 1,362,342 | (78,269) | ||
Exchange difference | 213,924 | 563,367 | ||
Net cash provided by operating activities | 11,847,880 | 8,675,077 | ||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Purchase of property, plant and equipment | (105,488) | (607,192) | ||
Acquisition of proprietary technologies | - | (265,150) | ||
Refund of deposit paid for acquisition of business | 928,361 | - | ||
Deposit for acquisition of proprietary technologies | (3,119,798) | (18,544) | ||
Net cash used in Investing activities | (2,296,925) | (890,886) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Proceeds from short-term loan | 782,656 | - | ||
Advance from a shareholder | 334,957 | - | ||
Repayment to a shareholder | (334,957) | - | ||
Proceeds from issuance of common stock | - | 37,537 | ||
Net cash provided by financing activities | 782,656 | 37,537 | ||
Effect of exchange rate changes on cash and cash equivalents | 461,785 | 154,753 | ||
Net increase in cash and cash equivalents | 10,795,396 | 7,976,481 | ||
Cash and cash equivalents, beginning balance | 13,211,443 | 8,577,704 | ||
Cash and cash equivalents, ending balance | $ 24,006,839 | $ 16,554,185 | ||
SUPPLEMENTAL DISCLOSURES: | ||||
Interest received | $ 271,737 | $ - | ||
Interest payments | $ (10,371) | $ - | ||
Income tax payments | $ (3,197,761) | $ (4,145,012) | ||
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||
Conversion of preferred stock to common stock | $ - | $ 2,649 | ||
Cashless exercise of warrants | $ - | $ 815 | ||
Prior year deposit for acquisition of property and equipment | $ - | $ 439,016 | ||
