omniture

China Medicine Announces First Quarter 2007 Results

China Medicine Corporation
2007-05-17 10:59 559

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

Source: China Medicine Corporation
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