XIANYANG, China, August 15, 2011 /PRNewswire-Asia-FirstCall/ -- BioStar Pharmaceuticals, Inc. (NASDAQ GM: BSPM) ("BioStar" or "the Company"), a Xianyang-based manufacturer of a leading PRC over-the-counter Hepatitis B medicine, Xin Aoxing Oleanolic Acid Capsules ("Xin Aoxing") and a variety of pharmaceutical products, today announced its unaudited financial results for the second quarter and first half 2011 ended June 30, 2011.
SECOND QUARTER AND FIRST HALF 2011 FINANCIAL SUMMARY:
2Q2011 ($M except | 2Q2010 ($M except | Change (%) | 1H2011 ($M except | 1H2010 ($M except | Change (%) | ||
Net sales | 25.9 | 19.4 | 33.6% | 41.2 | 31.8 | 29.7% | |
Gross profit | 18.6 | 14.4 | 29.5% | 29.3 | 23.9 | 22.6% | |
Income from operations | 6.0 | 7.5 | -21.0% | 9.7 | 10.7 | -9.3% | |
Net income | 4.2 | 5.6 | -25.6% | 6.9 | 7.8 | -12.3% | |
Non-GAAP net income1 | 5.5 | 5.8 | -6.0% | 8.4 | 8.2 | 1.6% | |
Diluted EPS | 0.15 | 0.20 | -25.0% | 0.25 | 0.28 | -10.7% | |
Non-GAAP diluted EPS1 | 0.20 | 0.21 | -4.7% | 0.30 | 0.30 | - | |
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SECOND QUARTER AND FIRST HALF 2011 BUSINESS AND OPERATION HIGHLIGHTS:
Ronghua Wang, Biostar Pharmaceutical Chief Executive Officer and Chairman of the Board of Directors said: "Biostar's aggressive marketing approach, coupled with solid market demand for our products, ensured that revenue for the second quarter ended 30 June 2011 grew 33.6% year on year to $25.9 million. Flagship product Xin Aoxing Capsule continued to be main growth catalyst, as revenue from Xin Aoxing Capsule grew 35.7% year on year to $17.2 million. Performance of our other products remained steady, with revenue from them growing 29.6% year on year to $8.7million."
"In order to capture the market opportunities stemming from the increasing healthcare needs in PRC, Biostar has been making strategic investment to increase its market share. During the second quarter of 2011, Biostar maintained its growth strategy both at provincial level and rural areas, while establishing sales networks in Zhejiang, Hunan and Hainan provinces and increasing rural presence to 11,300 sales outlets. The company now operates in 25 provinces in PRC. BioStar believes that Zhejiang, Hunan and Hainan provinces, representing about a tenth of China's population, or approximately 129 million people, with relatively higher GDP, are markets where its products can be marketed and sold effectively."
"I'm also happy to report that we have submitted the final information required by the Drug Administration under the General Logistics Department of People's Liberation Army ("PLA") for approval to produce Zushima. As Zushima is a pain reliever designed for use by military personnel and on military's annual purchasing list of medicines, its approval and certification are required from the PLA. We have already taken appropriate steps to provide the PLA with all relevant information and data required to expedite their review and evaluation."
"In the near term, our strategic priorities to maintain Biostar's market leadership are to invest in the development of innovative products pipeline and to expedite product commercialisation through the refining of sales channels and broadening of distribution points to cover Guangxi Autonomous Region and more rural markets before the end of the year. We also aim to enhance our competitive cost base by capitalizing on our vertically integrated business model and by increasing incentive-driven sales programs to reduce marketing expenses. Our management team is committed to consistently review and prioritize our spending and to enhance our financial position to support the company's organic growth."
"Looking ahead, with our expanded sales network, enhanced brand positioning and diversified product portfolio, we remain confident about the company's business outlook. We maintain the previously provided guidance for top-line growth of 20-25% for our fiscal year ending December 31, 2011. We anticipate to continue improving our operations to drive growth and increase value for our shareholders."
SECOND QUARTER AND FIRST HALF 2011 FINANCIAL REVIEW:
Net sales
Total net sales in 2Q2011 increased 33.6% from 2Q2010 to $25.9 million. Total net sales in 1H2011 increased 29.7% from 1H2010 to $41.2 million. This was primarily due to our diversified product portfolio and marketing efforts in existing and new sales regions.
Net sales from Xin Aoxing
Net sales from Xin Aoxing in 2Q2011increased 35.7% from 2Q2010 to $17.2 million, representing 66.3% of total sales. Net sales from Xin Aoxing in 1H2011 increased 29.2% from 1H2010 to $28.3 million, representing 68.6% of total sales. The increase primarily reflected an increase in sales in the new markets.
Gross Profit and Gross Profit Margin
Gross profit in 2Q2011 increased 29.5% from 2Q2010 to $18.6 million. Gross profit in 1H2011 increased 22.6% from 1H2010 to $29.3 million.
Cost of sales in 2Q2011 increased 45.5% to $7.3 million. Cost of sales in 1H2011 increased 51.5% to $11.9 million. The increase was primarily due to an increase in sales volume of the Company's products and an increase in costs of raw materials, especially those used in Taohuasan Pediatrics Medicine, Danshen Granule, and Tianqi Dysmenorrhea Capsule.
Gross profit margin was 71.9% in 2Q2011 compared to 74.2% in 2Q2010. Gross margin in 1H2011 was 71.2%compared to 75.3% in 1H2010.The overall gross profit margin in 2Q2011 and 1H2011 decreased by 2% and 4% year over year respectively mainly due to an increase in the costs of raw materials. However, the gross margin of the major product - Xin Aoxing has kept unchanged at 85% both in 2Q2011 and 1H2011, which counts for almost 70% of the total sales for the first six months of the year.
Operating Expenses
Selling expenses in 2Q2011 totaled $10.5 million, an increase of 73% from 2Q2010.As a percentage of total revenue, selling expenses were 40% in 2Q2011, compared to 31% in 2Q2010. Selling expenses for 1H2011 totaled $16.5 million, an increase of 42% from 1H2010. As a percentage of total revenue, selling expenses were 40% in 1H2011, compared to 37% in 1H2010. The period-over-period increase in selling expenses in dollar amount for 2Q2011 was mainly due to an increase in both business volume and advertising expenditures spent in new markets. Advertising expenses were approximately $6.1 million and $9.2 million for 2Q2011 and 1H2011, respectively, accounting for 58% and 56% of the total selling expenses for each period, compared to 65% and 61% for the same period in 2010.
General and administrative expenses in 2Q2011 totaled $2.2 million, an increase of 175% from 2Q2010. As a percentage of total revenue, general and administrative expenses were 9% in 2Q2011, compared to 4% in 2Q2010. General and administrative expenses for 1H2011 totaled $3.1 million, an increase of 97% from 1H2010. As a percentage of total revenue, general and administrative expenses were 8% in1H2011, compared to 5% in 1H2010. The significant increases of general and administrative expenses both for 2Q2011 and 1H2011 were contributed to over one million stock-based compensation awarded to employees during 2Q2011.
Share-based compensation expenses in 2Q2011 totaled $1.3 million. Share-based compensation expenses in 1H2011 totaled $1.5 million.
Income from Operations and Operating Margin
Income from operation in 2Q2011 decreased 21% from 2Q2010 to $6.0 million. Income from operation in 1H2011 decreased 9.3% from 1H2010 to $9.7 million.
Operating margin in 2Q2011 was 23.0% in 2Q2011 compared to 38.9% in 2Q2010.Operating margin in 1H2011 was 23.5% in 1H2011 compared to 33.6% in 1H2010.
Excluding non-cash share-based compensation expenses of $1.3 million, Non-GAAP operating income in 2Q2011 decreased 6.5% to $7.3 million. Non-GAAP operating income in 1H2011 increased 1.0% to $11.2 million. Non-GAAP operation margin in 2Q2011 was 28.0%, compared to 40.1% in 2Q2010. Non-GAAP operation margin in 1H2011 was 27.1%, compared to 34.8% in 1H2010.
Income Tax Expenses
Income tax expense in 2Q2011 was $1.9 million, compared to $1.8 million in 2Q2010. Income tax expense in 1H2011 was $2.9 million, compared to $2.6 million in 1H2010.
Net Income, Net Margin and Diluted Earnings Per Share
Net income in 2Q2011 decreased 25.6% from 2Q2010 to $4.2 million. Net margin was 16.0% in 2Q2011 compared to 28.8% in 2Q2010.Net income in 1H2011 decreased 12.3% from 1H010 to $6.9 million. Net margin was 16.7% in1H2011 compared to 24.7% in 1H2010.
Excluding non-cash share-based compensation expenses of $1.3million, Non-GAAP net income in 2Q2011 decreased 6.0% to $5.5 million, Non-GAAP net income in 1H2011 increased 1.6% to $8.4 million. Non-GAAP net margin in 2Q2011 was 21.1%, compared to 30.0% in 2Q2010. Non-GAAP net margin in 1H2011 was 20.3%, compared to 25.9% in 1H2010.
Diluted earnings per share were $0.15 and $0.20 for the 2Q2011 and 2Q2010, based upon 27,783,978 and 27,797,012 diluted common stocks outstanding, respectively. Non-GAAP diluted earnings per share were $0.20 and $0.21for 2Q2011 and 2Q 2010 respectively. Diluted earnings per share were $0.25 and $0.28 for the 1H2011 and 1H2010 based upon 27,586,802 and 27,797,012 diluted common stocks outstanding, respectively. Non-GAAP diluted earnings per share were $0.30 and $0.30 for 1H2011 and 1H2010 respectively.
Balance Sheet and Cash Flow
Cash and cash equivalents totaled $20.4 million on June 30, 2011, compared to $13.2 million on December 31, 2010. For the six months ended June 30, 2011, the Company generated $4.9million in cash from operations as compared to $1.8million in the same period 2010.
Accounts receivable balance was approximately $32.6 million on June 30, 2011, versus approximately $28.5 million on December 31, 2010. Days sales outstanding (DSO) for the first six months of 2011 increased to 116 days, compared to 110 days for the same period in 2010, and is in-line with management's target range of 130 days to 150 days.
The Company had a current ratio of 5.7 to 1 and stockholders' equity of $70.0 million, with total current assets of $55.9 million versus total liabilities of $9.8million on June 30, 2011.
Working capital on June 30, 2011 was $46.1million, compared to $32.2 million in the year ago period.
YEAR 2011 ANTICIPATED MILESTONES:
The Company is reiterating its fiscal 2011 full year net sales guidance of 20-25% growth and aims to further penetrate in rural area by establishing 3,000 additional rural sales outlets and take total number of rural sales outlets to 13,000 from 10,000 last year.
CONFERENCE CALL DETAILS:
The Company will be hosting a conference call at 10:30 am E.T. 15 August, 2011. To participate in the conference call, please dial +1-877-941-4775within the United States, or US +1-480-629-9761 if calling internationally.
A playback will be available till 11:59 pm E.T. August 22, 2011. To listen, please call 1-877-870-5176 within the United States or 1-858-384-5517 when calling internationally. Utilize the pass code 4463197 for the replay.
This call is being webcast by ViaVid Broadcasting and can be accessed at ViaVid's website at http://www.viavid.netor at the following link: http://viavid.net/dce.aspx?sid=00008AF9.
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 Ao Xing Oleanolic Acid Capsule, an over-the-counter ("OTC") medicine for chronic hepatitis B, a disease affecting approximately 10% of the Chinese population. In addition to its hepatitis product, Biostar currently manufactures two broad-based OTC products, two prescription-based pharmaceuticals, one medical device and five health supplements. 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 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.
About Non-GAAP Financial Measures
To supplement the Company's consolidated financial statements, which statements are prepared and presented in accordance with GAAP, the Company uses the following non-GAAP financial measures: non-GAAP adjusted net income and non-GAAP adjusted EPS. The presentation of this financial information is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. The Company uses these non-GAAP financial measures for financial and operational decision making and as a means to evaluate period-to-period comparisons. Management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the Company's performance and liquidity by excluding certain expenses and expenditures that may not be indicative of "recurring core business operating results", meaning operating performance excluding non-cash stock-based compensation charge. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing performance and when planning, forecasting and analyzing future periods. These non-GAAP financial measures also facilitate management's internal comparisons to historical performance and liquidity as well as comparisons to competitors' operating results. The Company believes these non-GAAP financial measures are useful to investors both because (1) they allow for greater transparency with respect to key metrics used by management in its financial and operational decision making and (2) they are used by our institutional investors and the analyst community to help them analyze the health of the business.
Investor Relations contact: | |
BioStar Pharmaceuticals, Inc. | |
Zack Pan, CFO | |
T: +1-405-996-8829 | |
Fleishman-Hillard | |
T: 852-2530-0228 | |
~FINANCIAL TABLES FOLLOW~
BIOSTAR PHARMACEUTICALS, INC. Condensed Consolidated Statements of Operations Unaudited | ||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||
2011 | 2010 | 2011 | 2010 | |||||||
Sales, net | $25,912,134 | $ 19,395,691 | $41,201,061 | $31,758,866 | ||||||
Cost of sales | 7,282,585 | 5,004,876 | 11,886,298 | 7,845,302 | ||||||
Gross profit | 18,629,549 | 14,390,815 | 29,314,763 | 23,913,564 | ||||||
Operating expenses: | ||||||||||
Selling expenses | 10,459,879 | 6,051,256 | 16,516,904 | 11,660,817 | ||||||
General and administrative expenses | 2,219,350 | 807,139 | 3,119,376 | 1,587,351 | ||||||
Total operating expenses | 12,679,229 | 6,858,395 | 19,636,280 | 13,248,168 | ||||||
Income from operations | 5,950,320 | 7,532,420 | 9,678,483 | 10,665,396 | ||||||
Other income (expense) | ||||||||||
Interest income | 99,499 | 2,435 | 144,314 | 6,121 | ||||||
Other income | 454 | - | 548 | - | ||||||
Interest expense | (7,387) | - | (7,387) | - | ||||||
Other expenses | - | (187,000) | - | (198,772) | ||||||
Total other income (expense) | 92,566 | (184,565) | 137,475 | (192,651) | ||||||
Income before income taxes | 6,042,886 | 7,347,855 | 9,815,958 | 10,472,745 | ||||||
Provision for income taxes | 1,890,252 | 1,768,800 | 2,939,811 | 2,630,375 | ||||||
Net income | $4,152,634 | $5,579,055 | $6,876,147 | $ 7,842,370 | ||||||
Net income per common stock | ||||||||||
Basic | $ 0.15 | $ 0.21 | $ 0.25 | $ 0.30 | ||||||
Diluted | $ 0.15 | $ 0.20 | $ 0.25 | $ 0.28 | ||||||
Weighted average number of common | ||||||||||
Basic | 27,783,978 | 26,337,637 | 27,586,802 | 26,337,637 | ||||||
Diluted | 27,783,978 | 27,797,012 | 27,586,802 | 27,797,012 | ||||||
BIOSTAR PHARMACEUTICALS, INC. Condensed Consolidated Balance Sheets | ||||
June 30, | December 31, | |||
2011 | 2010 | |||
(Unaudited) | ||||
ASSETS | ||||
Current Assets | ||||
Cash and cash equivalents | $ 20,378,813 | $ 13,211,443 | ||
Accounts receivable | 32,589,618 | 28,535,712 | ||
Inventories | 1,669,686 | 351,682 | ||
Prepaid expenses and other receivables | 1,296,010 | 1,251,397 | ||
Total Current Assets | 55,934,127 | 43,350,234 | ||
Deposits | 6,962,711 | 7,713,482 | ||
Property and equipment, net | 5,960,352 | 5,958,636 | ||
Intangible assets, net | 10,910,846 | 11,064,591 | ||
Total Assets | $ 79,768,036 | $ 68,086,943 | ||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
Current Liabilities | ||||
Accounts and other payables | $ 5,722,790 | $ 3,991,071 | ||
Value-added tax payable | 1,078,415 | 1,509,173 | ||
Income tax payable | 1,895,432 | 2,086,702 | ||
Short term bank loan | 773,635 | - | ||
Due to a shareholder | 334,957 | - | ||
Total Current Liabilities | 9,805,229 | 7,586,946 | ||
Commitment and contingencies | ||||
Stockholders' Equity | ||||
Common stock, $.001 par value, 100,000,000 shares authorized, | 27,417 | 27,387 | ||
Additional paid-in capital | 22,199,832 | 20,706,667 | ||
Statutory reserve | 4,666,381 | 4,666,381 | ||
Retained earnings | 40,000,688 | 33,124,540 | ||
Accumulated other comprehensive income | 3,068,489 | 1,975,022 | ||
Total Stockholders' Equity | 69,962,807 | 60,499,997 | ||
Total Liabilities and Stockholders' Equity | $ 79,768,036 | $ 68,086,943 | ||
BIOSTAR PHARMACEUTICALS, INC. Unaudited Condensed Consolidated Statements of Cash Flows Unaudited | ||||
Six Months Ended June 30, | ||||
2011 | 2010 | |||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||
Net income | $ 6,876,147 | $ 7,842,370 | ||
Adjustments to reconcile net income to net cash | ||||
provided by operating activities: | ||||
Depreciation and amortization | 252,456 | 277,753 | ||
Stock-based compensation and other non-cash expenses | 1,493,195 | 392,551 | ||
Make good shares expense | - | 187,000 | ||
Changes in operating assets and liabilities: | ||||
Accounts receivable | (3,396,918) | (5,385,500) | ||
Inventories | (1,309,907) | (1,516,785) | ||
Prepaid expenses and other receivables | (15,802) | (759,808) | ||
Accounts payable and accrued expenses | 1,639,831 | 552,188 | ||
Value-added tax payable | (465,504) | (109,713) | ||
Income tax payable | (239,313) | 286,730 | ||
Exchange difference | 92,487 | - | ||
Net cash provided by operating activities | 4,926,672 | 1,766,786 | ||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||
Purchase of property, plant and equipment | (100,427) | (484,628) | ||
Acquisition of proprietary technologies | - | (265,150) | ||
Refund of deposit paid for acquisition of business | 928,361 | - | ||
Net cash provided by (used in) investing activities | 827,934 | (749,778) | ||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||
Proceeds from short-term loan | 773,635 | - | ||
Advances from a shareholder | 334,957 | - | ||
Proceeds from issuance of common stock | - | 37,537 | ||
Net cash provided by financing activities | 1,108,592 | 37,537 | ||
Effect of exchange rate changes on cash and cash equivalents | 304,172 | 31,390 | ||
Net increase in cash and cash equivalents | 7,167,370 | 1,085,935 | ||
Cash and cash equivalents, beginning balance | 13,211,443 | 8,577,704 | ||
Cash and cash equivalents, ending balance | $ 20,378,813 | $ 9,663,639 | ||
SUPPLEMENTAL DISCLOSURES: | ||||
Interest received | $ 144,314 | $ 6,121 | ||
Interest payments | $ (7,387) | $ - | ||
Income tax payments | $ (3,176,611) | $ (2,343,972) | ||
SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING | ||||
Conversion of preferred stock to common stock | $ - | $ 2,628 | ||
Cashless exercise of warrants | $ - | $ 815 | ||
Prior year deposit for acquisition of property and equipment | $ - | $ 439,016 | ||
Payable for acquisition of property and equipment and intangible assets | $ - | $ 198,279 | ||
BIOSTAR PHARMACEUTICALS, INC. Reconciliation of GAAP and Non-GAAP Financial Measures (in US dollars) | |||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||
2011 | 2010 | 2011 | 2010 | ||||
GAAP Net Income | $4,152,634 | $5,579,055 | $6,876,147 | $7,842,370 | |||
GAAP EPS (fully diluted) | $0.15 | $0.20 | $0.25 | $0.28 | |||
Exclusion | |||||||
Stock-based Compensation Charge | $1,315,175 | $238,061 | $1,493,195 | $392,551 | |||
Non-GAAP Net Income | $5,467,809 | $5,817,116 | $8,369,342 | $8,234,921 | |||
Non-GAAP EPS (fully diluted) | $0.20 | $0.21 | $0.30 | $0.30 | |||
Shares used in computing fully diluted EPS | 27,783,978 | 27,797,012 | 27,586,802 | 27,797,012 | |||
