Full Year 2009 Revenue Increases 25% to $136.1 Million
Full Year 2009 Net Income Rose 17% to $19.4 Million, or $0.61 Per Diluted Share
LIUZHOU CITY, China, April 1 /PRNewswire-Asia-FirstCall/ -- China Baicaotang Medicine Limited, (OTC Bulletin Board: CNBI), ("China Baicaotang" or the "Company"), the leading pharmaceutical distributor, retail pharmacy, and manufacturer of pharmaceuticals and medical-related products in Guangxi Province, China, today announced results for the fourth quarter and full-year ended December 31, 2009.
Fourth Quarter 2009 Highlights
-- Revenue increased 56.0% to $36.6 million
-- Gross profit grew 20.6% to $9.0 million
-- Operating income increased 21.9% to $5.9 million
-- Net income increased 31.3% to $4.0 million, or $0.13 per diluted share
Full Year 2009 Highlights
-- Revenue increased 24.9% to $136.1 million
-- Gross profit grew 19.8% to $35.5 million
-- Operating income increased 15.1% to $26.9 million
-- Net income increased 16.5% to $19.4 million, or $0.61 per diluted share
-- Became a public company through share exchange transaction
-- Won 6 counties and cities' tender for distribution business under New
Rural Co-operative Medicare Plan
"We closed 2009 with solid results, achieving double-digit growth in revenue and net income," commented Mr. Hui Tian Tang, Chairman and Chief Executive Officer of China Baicaotang Medicine Limited. "Our unique, vertically integrated business model combines manufacturing capabilities with the largest regional wholesale network in Guangxi and an extensive retail network position. We continue to focus on expanding our dominant position in second and third tier cities in Guangxi Province in order to take advantage of China's $124.3 billion universal healthcare bill, which targets rural areas."
Fourth Quarter 2009 Results
For the fourth quarter ended December 31, 2009, revenue increased 56.0% to $36.6 million, as compared to $23.5 million in the same quarter of 2008. The increase in revenue was primarily driven by strong sales volume in the Company's pharmaceutical distribution sales channel. Within this sales channel, the Company increased the number of products sold and grew its customer base. In terms of revenue by business segment, the wholesale distribution channel accounted for 72.0%, while retail and manufacturing contributed 24.2% and 3.8%, respectively, as compared to 62.4% from pharmaceutical distribution, 30.0% from retail and 7.6% from manufacturing for the fourth quarter of 2008.
Gross profit grew 20.6% to $9.0 million, as compared to $7.4 million for the same period of 2008. Gross margin was 24.5%, as compared to 31.7% in the same period last year. The decline was mainly attributable to the increase in the costs of purchasing merchandise in support of greater sales volume. Gross margin in the year ago period was elevated by sales of Yanguanglian injection, a high margin product which accounted for the majority of sales from the Company's Hefeng Pharmaceutical subsidiary. In 2009, demand for other products in Hefeng Pharmaceutical's product portfolio accounted for a larger proportion of the product mix. As a result, the Company's overall gross margin returned to a more sustainable rate of around 25%.
Operating expenses increased 18.3% to $3.1 million, as compared to $2.6 million in the same period last year. Administrative expenses increased 47.3% to $1.8 million, as compared to $1.2 million in the same period of 2008, primarily due to an increase in staff compensation. Selling expenses rose 94.2% to $1.3 million, compared to $0.7 million in the same period of 2008, due to increased marketing expenses. Research and development expenses declined 93.9% to $0.05 million as compared to $0.8 million in the same period of 2008, as the majority of the first phase of R&D expenses was recorded in 2008. Once the effectiveness of the first phase is complete, the Company will invest further in research and development.
Operating income increased 21.9% to $5.9 million, or 16.0% of revenue, from $4.8 million, or 20.5% of revenue, in the fourth quarter of 2008.
Net income increased 31.3% to $4.0 million, or $0.13 per diluted share, compared to $3.1 million, or $0.10 per diluted share, in the fourth quarter of 2008. Diluted earnings per share were calculated using weighted average shares of 32,055,319 and 32,000,000 for the quarters ended December 31, 2009 and 2008, respectively.
Full Year 2009 Results
Revenue increased 24.9% to $136.1 million, as compared to $109.0 million for the year ended December 31, 2008. The increase was mainly attributable to an increase of $24.3 million revenue from the Company's pharmaceutical distribution operations as a result of an increase in the quantity and range of products sold to existing hospital clients supported by the Chinese government's expansion in healthcare security schedule coverage and the implementation of the New Rural Cooperative Medicare Program. Revenue from the Company's pharmaceutical distribution segment accounted for approximately 71.4% of total revenue, while retail contributed 22.9% and manufacturing generated 5.7%. Gross profit increased 19.8% to $35.5 million, as compared to $29.6 million in 2008. Gross margin was 26.1%, as compared to 27.2% in 2008. The decrease in gross margin was primarily due to the increase in purchasing costs. Operating income increased 15.1% to $26.9 million, from $23.4 million in 2008. Net income increased 16.5% to $19.4 million, or $0.61 per diluted share, as compared to $16.7 million, or $0.52 per diluted share, for the year ended December 31, 2008. Diluted earnings per share were calculated using weighted average shares of 32,013,943 and 31,963,669 for the years ended December 31, 2009 and 2008, respectively.
Financial Condition
As of December 31, 2009, Baicaotang had $13.3 million in cash and cash equivalents and $29.6 million in working capital and a current ratio of 1.8x. Long-term debt was $3.6 million. At year end, shareholders' equity was $53.4 million, an increase from $28.6 million at the end of 2008.
The Company generated $5.9 million in cash from operating activities for the year ended December 31, 2009, compared to cash generated from operating activities of $11.7 million in 2008.
In October 2009, the Company raised $6.3 million in gross proceeds through the first closing of a private placement of its common stock and warrants. In February 2010, the Company completed a second closing of the private placement, raising an additional $2.6 million in gross proceeds. The Company intends to use the proceeds to expand its pharmaceutical retail sales network in Guangxi Province, especially focusing on rural retail pharmacy markets.
Business Outlook
China Baicaotang plans to implement a three-pronged growth strategy to support its business expansion. For its pharmaceutical distribution and retail pharmacy segments, the Company will continue to focus on second and third tier cities and rural markets supported by well-designed marketing initiatives. For 2010, the Company plans to open an additional 160 pharmacy stores and expand the product portfolio which it manufactures to gain market share. In addition, China Baicaotang plans to invest in advanced logistics and information management systems and maximize its utilization rate of Hefeng production capacity.
"China Baicaotang is well-positioned to benefit from Chinese healthcare reform programs and maintain its position as one of the largest manufacturers and distributors in Guangxi Province," concluded Mr. Tang. "As a highly integrated player, our growth is supported by a balanced product portfolio, healthy product margins and a strong brand name."
About China Baicaotang
China Baicaotang is engaged in pharmaceutical distribution, pharmacy retailing, and the manufacture of pharmaceuticals and medical-related products through its subsidiaries Guangxi Liuzhou Baicaotang Medicine Limited, Hefeng Pharmaceutical Co. Limited, and Guangxi Liuzhou Baicaotang Medicine Retail Limited in Guangxi province, China. It operates the largest regional retail network in Guangxi province, consisting of 66 directly owned retail stores in Guangxi province and currently over 8,000 products are distributed through the Company's wholesale distribution network.
Safe Harbor Statement
This presentation contains "forward-looking statements" within the meaning of the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including competition from existing and new competitors, management of growth, key personnel's continued employment at the Company, sufficient financing, and Chinese governmental regulations of the pharmaceutical industry. Accordingly, although the Company believes that the expectations reflected in such forward-looking statements are reasonable, there can be no assurance that such expectations will prove to be correct. The Company has no obligation to update the forward-looking information contained in this presentation.
For more information, please contact:
Company Contact:
Ms. Shelly Zhang, Chief Financial Officer
China Baicaotang Medicine Limited
Email: z_shelly@hotmail.com
Tel: +86-772-363-8318
Investor Relations Contact:
Mr. Shaun Smolarz, Financial Writer
Email: shaun.smolarz@ccgir.com
Tel: +1-646-701-7444
Mr. Crocker Coulson, President
Email: crocker.coulson@ccgir.com
Tel: +1-646-213-1915
CCG Investor Relations
Web: http://www.ccgirasia.com
Financial Tables Follow
China Baicaotang Medicine Limited
Consolidated Statements of Income and Comprehensive Income
(Stated in US Dollars)
Three months ended Twelve months ended
December 31, December 31,
2009 2008 2009 2008
Revenue
Sales $36,613,263 $23,476,300 $136,086,708 $108,991,329
Cost of sales 27,634,419 16,030,615 100,578,769 79,361,987
Gross profit 8,978,844 7,445,685 35,507,939 29,629,342
Operating
expenses
Administrative
expenses 1,791,001 1,216,102 4,598,800 3,341,605
Research and
development
expenses 46,719 763,995 99,688 763,995
Selling expenses 1,288,827 663,761 3,865,980 2,122,153
3,126,547 2,643,858 8,564,468 6,227,753
Income from
operations 5,852,297 4,801,827 26,943,471 23,401,589
Interest income (49,802) 502 16,100 29,315
Government grants (41,434) (69,087) 29,320 --
Other income 107,335 246,971 95,345 143,426
Finance costs (322,943) (271,854) -1,413,873 -1,260,290
Income before
income taxes 5,545,453 4,708,359 25,670,363 22,314,040
Income taxes (1,513,057) (1,638,035) -6,261,798 (5,656,878)
Net income
attributable to
China Baicaotang
Medicine Limited
common
stockholders 4,032,396 3,070,324 $19,408,565 $16,657,162
Other
comprehensive
income
Foreign currency
translation
adjustments 32,179 95,823 57,322 1,142,614
Total
comprehensive
income 4,064,575 3,166,147 $19,465,887 $17,799,776
Earnings per
share:
basic and diluted $0.13 $0.10 $0.61 $0.52
Weighted average
number of shares
outstanding:
basic and diluted 32,055,319 32,000,000 32,013,943 31,963,669
China Baicaotang Medicine Limited
Consolidated Balance Sheets
(Stated in US Dollars)
As of December 31,
2009 2008
ASSETS
Current assets
Cash and cash equivalents $13,304,158 $1,265,184
Restricted cash 1,155,779 1,228,011
Trade receivables, net 35,410,039 20,976,203
Amounts due from related companies 4,275,586 4,658,061
Other receivables, prepayments and
deposits 2,526,398 1,252,527
Inventories 8,745,525 6,425,765
Deferred taxes 60,164 60,164
Total current assets 65,477,649 35,865,915
Goodwill 107,968 107,968
Other intangible assets 660,034 786,049
Property, plant and equipment, net 12,171,689 12,413,274
Land use rights 13,979,753 15,667,168
Deposits for acquisition of property,
plant and equipment -- 299,325
Deferred taxes 663,699 674,649
TOTAL ASSETS $93,060,792 $65,814,348
LIABILITIES AND STOCKHOLDERS'
EQUITY
LIABILITIES
Current liabilities
Trade payables $19,159,212 $15,007,291
Bills payable 2,239,604 1,448,293
Other payables and accrued
expenses 3,194,612 3,230,577
Amounts due to directors 1,008,111 1,270,929
Amounts due to related
companies 128,579 126,440
Income tax payable 562,603 954,666
Secured bank loans 7,136,069 10,291,005
Other loans 2,361,258 2,432,139
Retirement benefit costs 59,158 89,016
Total current liabilities 35,849,206 34,850,356
Secured long-term bank loans 3,631,957 2,200,500
Retirement benefit costs 201,320 180,426
TOTAL LIABILITIES 39,682,483 37,231,282
STOCKHOLDERS' EQUITY
Common stock: par value $0.001 per
share
Authorized 100,000,000 shares in
2009 and 2008; 37,089,370
shares issued and outstanding
in 2009 and 32,000,000 shares
in 2008 37,089 32,000
Additional paid-in capital 14,920,899 9,596,632
Statutory and surplus
reserves 2,605,901 1,431,174
Accumulated other
comprehensive income 2,110,270 2,052,948
Retained earnings 33,704,150 15,470,312
TOTAL STOCKHOLDERS' EQUITY 53,378,309 28,583,066
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $93,060,792 $65,814,348
China Baicaotang Medicine Limited
Consolidated Statements of Cash Flows
(Stated in US Dollars)
Twelve months ended
December
31,
2009 2008
Cash flows from operating activities
Net income attributable to China
Baicaotang Medicine Limited common
stockholders $19,408,565 $16,657,162
Adjustments to reconcile net income to net
cash provided by operating activities
:-
Depreciation 598,276 632,900
Amortization of other intangible
assets 118,565 200,227
Amortization of land use rights 313,533 334,206
Deferred taxes 10,943 (52,835)
Gain on disposal of land use
rights (17,814) --
Recovery of doubtful debts -- (84,091)
Written off of other receivables 174,524 --
Changes in operating assets and
liabilities :-
Trade receivables (14,423,654) (9,394,900)
Other receivables, prepayments and
deposits (1,447,184) 199,870
Amounts due to (from) related companies (1,020,253) 324,261
Inventories (2,318,179) 3,003,812
Trade payables 4,149,091 192,095
Bills payable 790,772 (180,766)
Other payables and accrued expenses (35,940) (442,348)
Retirement benefit costs (8,959) 680
Income tax payable (391,796) 344,490
Net cash flows provided by operating
activities 5,900,490 11,734,763
Cash flows from investing activities
Payments to acquire and for deposits for
acquisition of property, plant and
equipment and land use rights (71,328) (721,910)
Net cash received from the RTO 22,694 --
Cash received from disposal of land use
rights 1,391,588 --
Cash received from acquisition of Hefeng -- 631,818
Advanced to related companies (1,689,557) (741,043)
Net cash flows used in investing activities $(346,603) $(831,135)
Cash flows from financing activities
Advance from related companies $3,094,189 $72,368
Restricted cash 72,183 (250,089)
Repayments to directors (262,639) (1,016,329)
Dividend paid to former stockholders of
Baicaotang Medicine -- (6,940,000)
Proceeds from bank loans 9,587,885 10,688,723
Repayment of bank loans (11,310,190) (11,229,285)
Cash received from private placement 5,306,662 --
Proceeds from other loans 590,945 1,317,891
Repayment of other loans (661,777) (2,642,631)
Proceeds from issue of common stock by
Baicaotang Medicine -- 17,569
Net cash flows provided by (used in) financing
activities 6,417,258 (9,981,783)
Effect of foreign currency translation on cash
and cash equivalents 67,829 (176,397)
Net increase in cash and cash equivalents 12,038,974 745,448
Cash and cash equivalents - beginning of year 1,265,184 519,736
Cash and cash equivalents - end of year $13,304,158 $1,265,184
Supplemental disclosures for cash flow
information :-
Cash paid for
- Interest $1,291,082 $1,227,364
- Income taxes $6,642,573 $5,365,222
Non-cash investing activity
Acquisition of Hefeng in form of
non-cash contribution $-- $4,982,223
