First Quarter and Recent Highlights:
-- Revenue increased 34% to $5.1 million
-- Operating income increased 102% to $0.9 million
-- Net Income increased 162% to $0.8 million or $0.06 per diluted share
-- Company strengthens balance sheet through the receipt of $2.8 million
in warrant proceeds
-- Company expands product portfolio by successfully adding approximately
800 new products as a result of new bidding process
GUANGZHOU, China, May 16 /Xinhua-PRNewswire/ -- China Medicine Corporation
("CMC") (OTC Bulletin Board: CHME), a leading distributor of prescription and
over the counter pharmaceutical products, traditional Chinese medicines
(finished medicines made of Chinese herbs), Chinese herbs, nutritional
supplements, dietary supplements, medical supplies and medical formulations
today announced financial results for the first quarter ending March 31, 2007.
Revenue for the first quarter of 2007 increased 33.7 percent to $5.1
million compared to $3.8 million in 2006. Product sales revenue increased 39.0
percent during the quarter to $4.9 million with the year over year increase
primarily related to a $0.8 million contribution of new product revenue and
$0.6 million in existing product sales. During the first quarter sales of
Iopamidol was the largest component of product sales and represented
approximately 16.7 percent of total revenue with the Company's top five
products totaling $1.7 million or 33 percent of revenue. Sales of proprietary
products totaled $0.5 million during the first quarter 2007 which increased
126.8 percent from the same period last year. Sales of products for which the
Company has exclusive distribution rights totaled $1.8 million in the first
quarter and increased 10.4 percent versus the same period last year. Sales of
medical formulations decreased $0.09 million or 29.2 percent from last year as
the Company was impacted by the recent slowdown in the approval process of
China's State Food and Drug Administration ("SFDA") with regard to new drug
approval.
"The first quarter is traditionally our slowest quarter as customers
purchase excess products in the fourth quarter in preparation for the Chinese
New Year," commented Mr. Yang Senshan, CEO& President of CMC. "Additionally
the recent transition at the China SFDA caused a temporary delay in new
product approvals which impacted our medical formulation sales as this
intellectual property is used by several manufacturers to develop new drugs in
the market. Despite these two factors, we were able to significantly increase
our reported revenue as we utilized our strong reputation in the market and
financial position to gain both exclusive and non exclusive distribution
rights to several drugs which are in high demand in the market."
Sales of prescription medicines totaled $3.3 million during the first
quarter with over the counter medicines accounting for $0.3 million in sales.
Traditional Chinese medicine sales were $1.3 million in the first quarter and
increased 27.1 percent from last year. Gross profit for the first quarter of
2007 increased 25.1 percent to $1.7 million. This resulted in gross margins of
33.1 percent for the first quarter 2007 as compared to 35.4 percent for the
same period last year with the primary year over year decrease related to the
aforementioned lower sales of the Company's high margin medical formula
segment.
Operating income was $0.9 million for the quarter, an increase of 102.2
percent compared to the $0.5 million in 2006 with operating margins of 18.5
percent compared to 12.3 percent last year. The comparison was more favorable
by the absence of a $0.3 million non cash expense resulting from the reverse
merger recorded in the same period last year. Net income was $0.8 million or
$0.06 per weighted average fully diluted share compared to $0.3 million in net
income or $0.04 per weighted average fully diluted share in the first quarter
of 2006 based on 12.8 million and 7.2 million shares respectively. As of March
31, 2007 the Company has approximately 19.3 million fully diluted shares
outstanding.
China Medicine ended the quarter with $2.3 million in cash compared to
$1.8 million in 2006. During the first quarter cash used in operations was
$0.9 million as increases in inventory and advances to suppliers to support
future revenue growth offset positive net income. Accounts receivable were
$7.0 million and were unchanged from the end of 2006. Management believes
current receivables are of high quality, held with long-term customers, and is
confident in the ability to collect. Working capital at the end of the quarter
was $16.6 million as compared to $8.1 million in the first quarter of 2006
with shareholder equity increasing 29.5 percent from the end of 2006 to $17.0
million. There are approximately 5.8 million warrants outstanding which if
converted would bring the Company $12.9 million in additional proceeds.
"Our first quarter results were consistent with our internal
expectations," concluded Mr. Yang. "We believe as we move through 2007 that
the 50 percent increase in products we now distribute compared to last year,
complemented by traction through our new proprietary product initiatives, can
translate into significant revenue growth."
About China Medicine Corporation:
China Medicine is a distributor of prescription and over the counter
pharmaceutical products, traditional Chinese medicines (finished medicines
made of Chinese herbs), Chinese herbs, nutritional supplements, dietary
supplements, medical supplies and medical formulations to over 28 provinces
and 800 customers within China. The Company sells more than 2,200 products and
is actively building a pipeline of proprietary traditional and Chinese herbal
remedy products targeting oncology, high blood pressure and the removal of
Aflatoxins from food and animal feed. For more information visit the Company's
website at http://www.chinamedicinecorp.com.
Safe Harbor Statement:
This press release contains forward-looking statements concerning China
Medicine Corporation's business and products. The actual results may differ
materially depending on a number of risk factors including, but not limited
to, the following: general economic and business conditions, development,
shipment, market acceptance, additional competition from existing and new
competitors, changes in technology, and various other factors beyond its
control. All forward-looking statements are expressly qualified in their
entirety by this Cautionary Statement and the risks factors detailed in the
Company's reports filed with the Securities and Exchange Commission. China
Medicine Corporation undertakes no duty to revise or update any forward-
looking statements to reflect events or circumstances after the date of this
release.
For more information, please contact:
Company contacts
Mary Xia, China Medicine Corporation
Tel: (732 ) 438-8866
Email: mary66882002@yahoo.com
Investor Contacts:
Matt Hayden, Hayden Communications
(858) 704-5065
matt@haydenir.com
CHINA MEDICINE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2007 AND DECEMBER 31, 2006
ASSETS March 31, December 31,
2007 2006
Unaudited
CURRENT ASSETS
Cash $2,311,955 $371,480
Accounts receivable, trade, net of
allowance for doubtful accounts
of $34,366 and $34,021 as of
March 31, 2007 and
December 31, 2006, respectively 7,011,143 7,034,911
Inventories 3,034,106 1,900,467
Advances to suppliers 4,883,541 4,077,412
Other current assets 87,276 42,136
Total current assets 17,328,021 13,426,406
EQUIPMENT, net 1,207,028 1,215,311
OTHER ASSETS - Intangible assets 130,171 682
Total assets $18,665,220 $14,642,399
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable, trade $237,444 $188,877
Other payables - related parties 30,000 30,000
Other payables and accrued liabilities 17,791 23,265
Customer deposits 72,901 17,980
Taxes payable 335,844 295,902
Liquidated damages payable 44,003 44,003
Total liabilities 737,983 600,027
MINORITY INTEREST 913,794 908,480
SHAREHOLDERS' EQUITY
Preferred stock, $0.0001 par value;
10,000,000 shares authorized, 1,890,000
shares issued and outstanding at
March 31, 2007 and 2,340,000 shares issued
and outstanding at December 31, 2006 189 234
Common stock, $0.0001 par value;
90,000,000 shares authorized, 10,231,750
shares issued and outstanding at
March 31, 2007 and 8,160,000 shares issued
and outstanding at December 31, 2006 1,023 816
Paid-in capital 7,256,150 4,396,971
Contribution receivable (961,500) (961,500)
Statutory reserves 1,345,206 1,345,206
Retained earnings 8,742,963 7,979,242
Accumulated other comprehensive income 629,412 372,923
Total shareholders' equity 17,013,443 13,133,892
Total liabilities and shareholders'
equity $18,665,220 $14,642,399
CHINA MEDICINE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
(Unaudited)
2007 2006
REVENUES
Product sales $4,883,209 $3,511,979
Medical formula sales 209,786 296,103
Total revenues 5,092,995 3,808,082
COST OF GOOD SOLD 3,405,417 2,459,550
GROSS PROFIT 1,687,578 1,348,532
OPERATING EXPENSES
Research and development 100,112 54,664
Selling, general and administrative 643,846 503,468
Reverse acquisition - 323,770
Total operating expenses 743,958 881,902
INCOME FROM OPERATIONS 943,620 466,630
OTHER INCOME (EXPENSE), NET (2,972) (9,492)
INCOME BEFORE INCOME TAXES AND MINORITY
INTEREST 940,648 457,138
PROVISION FOR INCOME TAXES 199,959 165,581
INCOME BEFORE MINORITY INTEREST 740,689 291,557
MINORITY INTEREST 23,032 -
NET INCOME 763,721 291,557
OTHER COMPREHENSIVE INCOME
Foreign currency translation adjustment 256,489 44,765
COMPREHENSIVE INCOME $1,020,210 $336,322
Earning per share - basic $0.08 $0.04
Earning per share - diluted $0.06 $0.04
Weighted average number of shares
outstanding - basic 9,152,458 6,992,778
Weighted average number of shares
outstanding - diluted 12,808,226 7,193,678
