HAIKOU CITY, Hainan Province, China, May 15 /Xinhua-PRNewswire-FirstCall/ -- China Pharma Holdings, Inc. (“China Pharma”) (OTC Bulletin Board: CPHI), a specialty bio-pharmaceutical company that develops, manufactures and markets Western and Chinese medicines, today announced its financial results for the first quarter 2007 ended March 31, 2007.
First Quarter 2007 Highlights
-- Revenue increased 52.8% year-over-year to $7.2 million
-- Newly introduced hepatocyte growth promoting factor and ozagrel sodium
represented 8.5% and 10.7% of revenue, respectively
-- Net income was $2.4 million, up 46.6% year-over-year
China Pharma’s revenue in the first quarter of 2007 was $7.2 million, up 52.8% year-over-year from $4.7 million. The revenue increase for the quarter is attributed to a larger number of therapeutics on the market and increased market penetration. Gross profit increased 49.5% to $3.3 million from $2.2 million in the first quarter of 2006. Net income was $2.4 million, up 46.6% from $1.6 million in the same period a year ago. Results in the first quarter of 2007 benefited from net proceeds of $0.7 million from the sale of two pharmaceutical formulas. Fully diluted earnings per share were $0.07 compared to $0.05 in the first quarter 2006.
“We are happy to report another quarter of increasing revenue and net income growth. Our increased market penetration for our existing portfolio combined with the wide acceptance of our newly introduced therapeutics hepatocyte growth promoting factor and ozagrel sodium contributed to our strong revenue growth,” commented Ms. Zhi-lin Li, President and CEO of China Pharma.
Revenue growth for the quarter was led by growth in sales of gastrodin, which increased over 200%, and cefaclor, which increased over 100% from the first quarter of 2006. Sales of newly launched hepatocyte growth factor and ozagrel remained strong, contributing to 8.5% and 10.0% of revenue, respectively. No single therapeutic accounted for more than 15% of revenue during the quarter.
Gross profit for the first quarter of 2007 was $3.3 million, up 49.5% from $2.2 million in the first quarter of 2006. Gross margin was 45.6% compared to 46.6% from the same period a year ago. The slight variation in gross margin is attributed to product mix.
Selling expenses were $0.1 million for the quarter, or 2.0% of revenue, compared to $0.1 million, or 1.9% of revenue, in the same quarter last year. The slight increase in selling expenses was due to the increase in overall sales.
General and administrative (G&A) expenses were $1.4 million, or 19.1% of revenue, in the first quarter of 2007 compared to $0.3 million, or 5.6% of revenue, in the same period a year ago. G&A expense includes a $1.0 million write off of bad debt in during the quarter. Because the pharmaceutical industry in China typically has long collection cycles, the company writes off 50% of any receivables outstanding for more than twelve months. In the past, China Pharma has recovered outstanding long-term receivables.
The company recognized $0.8 million in research and development (“R&D”) expense during the quarter. The R&D expense represents costs associated with the sale of technological formulas during the quarter.
Income from operations was $0.9 million compared to $1.9 million in the first quarter of 2006.
During the quarter, China Pharma received $1.5 million in other income associated with the sale of technological formulas in the research and development stage. The company periodically sells certain technological formulas it determines will provide a higher return on investment in lieu of fully developing and launching these drugs in the market.
Net income for the first quarter of 2007 was $2.4 million, up 46.6% from $1.6 million in the first quarter of 2006. Fully diluted earnings per share were $0.07 compared to fully diluted earnings per share of $0.05. Fully diluted shares outstanding in the first quarter of 2007 were 36.3 million compared to 34.7 million in the comparable period a year ago.
Financial Condition
As of March 31, 2007, China Pharma had $3.0 million in cash and cash equivalents, total liabilities of $8.1 million and working capital of $24.5 million. Days sales outstanding were 174 days. Shareholders’ equity stood at $27.2 million compared to $20.9 million as of December 31, 2006.
Business Outlook
China Pharma has developed a diversified portfolio of therapeutics that, in aggregate, has contributed to revenue growth as the company expands its market penetration. It has already received approval for granisetron hydrochloride which it plans to launch in the second half of 2007. Moreover, the company is benefiting from the People’s Republic of China’s (PRC) commitment of $1.3 billion this year to expand its rural cooperative medical system to cover the entire country by 2010. China Pharma is reaffirming its full year guidance for 2007 of 30% increase in net income over 2006.
“We have developed a strong position in the pharmaceutical industry in China which supports our continued growth in both revenues and net income. The Chinese government is implementing some important changes which will benefit China Pharma, namely the new rural cooperative medical-care system and longer-term the State Food and Drug Administration’s tighter controls on the oversight of the drug approval process,” commented Ms. Li. “We feel both of these changes are positive for the industry and will enhance our competitive position.”
Conference Call
China Pharma will host a conference call on Tuesday, May 15 at 10:00 am EDT to discuss first quarter 2007 results. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (888) 481-7939. International callers should dial (617) 847-8707. The conference passcode is 845 135 91.
If you are unable to participate in the call at this time, a replay will be available on May 15th at 12:00 pm EDT, through May 22nd. To access the replay, dial (888) 286-8010. International callers should dial (617) 801-6888. The conference passcode is 71744541.
The conference will be broadcast live over the Internet and can be accessed by all interested parties at China Pharma’s website at http://www.chinapharmaholdings.com . To listen to the call please go to the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.
About China Pharma Holdings, Inc.
China Pharma Holdings, Inc. develops, manufactures, and markets generic and brand bio-pharmaceutical products in China that treat a wide range of conditions, including infections, hepatitis, vascular, CNS and other prevailing diseases. Helpson Bio-pharmaceutical Co., Ltd (Helpson), a specialty bio-pharmaceutical company headquartered in Haikou City, Hainan province in China, is a wholly owned subsidiary of China Pharma Holdings. For more information on the Company go to http://www.chinapharmaholdings.com .
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements in this press release and oral statements made by China Pharma on its conference call in relation to this release, constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Any statements set forth above that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include, but are not limited to, such factors as unanticipated changes in product demand, increased competition, failure to obtain or maintain intellectual property protection, downturns in the Chinese economy, uncompetitive levels of research and development, failure to obtain regulatory approvals, and other information detailed from time to time in the Company’s filings and future filings with the United States Securities and Exchange Commission. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.
CHINA PHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(unaudited)
For the three months
ended March 31,
2007 2006
Revenue $7,233,768 $4,732,991
Cost of revenue 3,934,849 2,526,020
Gross profit 3,298,919 2,206,971
Operating expenses:
Selling expenses 147,883 88,030
General and administrative 1,380,076 264,200
Research and development 836,404 --
Total operating expenses 2,364,363 352,230
Income from operations 934,556 1,854,741
Non-operating income (expenses):
Interest income 13,775 147
Interest expense (56,899) (23,799)
Other income 1,482,607 22,636
Total non-operating income (expense) 1,439,483 (1,016)
Income before taxes 2,374,039 1,853,725
Income tax expense -- (234,789)
Net income $2,374,039 $1,618,936
Comprehensive income - foreign currency
translation adjustments 216,416 59,085
Comprehensive income $2,590,455 $1,678,021
Basic and diluted earnings per common
share $0.07 $0.05
Weighted-average common shares
outstanding 36,337,958 34,723,056
CHINA PHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
March 31, December 31,
2007 2006
ASSETS
Current Assets:
Cash and cash equivalents $2,950,719 $656,441
Trade accounts receivable, less allowance
for doubtful of $2,603,164 and
$1,562,494, respectively 13,956,681 12,101,979
Other receivables, less allowance for
doubtful accounts of $29,244 and
$27,517, respectively 1,634,790 355,554
Deferred offering costs -- 59,390
Advances to suppliers 2,538,017 2,255,877
Inventory 11,476,631 10,277,887
Total Current Assets 32,556,838 25,707,128
Non-current Assets:
Property and equipment, net of accumulated
depreciation of $713,323 and $619,649,
respectively 2,660,818 2,725,173
Intangible assets, net of accumulated
amortization of 192,778 and
$184,175, respectively 59,208 65,344
Deferred tax assets 16,901 16,736
Total Non-current Assets 2,736,927 2,807,253
TOTAL ASSETS $35,293,765 $28,514,381
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Trade accounts payable $735,664 $477,291
Accrued expenses 133,317 104,216
Accrued taxes payable 248,139 167,419
Other payables 112,828 185,096
Advances from customers 149,870 141,871
Accounts payable -related parties 45,544 22,650
Short-term notes payable 6,598,260 6,533,649
Total Current Liabilities 8,023,622 7,632,192
Research and development commitments 32,296 31,980
Total Liabilities 8,055,918 7,664,172
Stockholders’ Equity:
Common stock, $0.001 par value, 60,000,000
shares authorized, 37,228,938 and
34,723,056 shares issued and outstanding,
respectively 37,229 34,723
Additional paid-in capital 11,559,656 7,764,979
Foreign currency translation adjustment 880,287 663,871
Retained earnings 14,760,675 12,386,636
Total Stockholders’ Equity 27,237,847 20,850,209
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $35,293,765 $28,514,381
CHINA PHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the three For the three
months ended months ended
March 31, March 31,
2007 2006
Cash Flows from Operating Activities:
Net income $2,374,039 $1,618,936
Depreciation and amortization 100,063 85,140
Changes in assets and liabilities:
Trade accounts receivable (1,728,236) (2,541,404)
Other receivables (1,309,181) (296,864)
Advances to suppliers (258,815) 401,068
Inventory (1,092,813) (765,072)
Deferred tax assets -- (25,892)
Deferred offering costs 59,743 --
Trade accounts payable 247,713 728,040
Accrued expenses 27,960 16,465
Accrued taxes payable 78,756 372,256
Other payables 88,814 (44,269)
Advances from customers 6,571 (264)
Net Cash Used in Operating Activities (1,405,386) (451,860)
Cash Flows from Investing Activities:
Purchase of property and equipment (2,360) (22,074)
Sale of technology 38,453 --
Purchase of intangible assets -- (2,472)
Net Cash (Used) by Investing
Activities 36,093 (24,546)
Cash Flows from Financing Activities:
Proceeds from sale of common stock
and warrants 3,797,183 --
Related party payables/receivables (138,860) --
-- --
Net Cash Proceeds from Financing
Activities 3,658,323 --
Effect of Exchange Rate Changes on
Cash 5,247 90,110
Net Change in Cash 2,294,277 (386,296)
Cash and Cash Equivalents at
Beginning of Period 656,441 461,220
Cash and Cash Equivalents at End of
Period $2,950,718 $74,924
For more information, please contact:
Crocker Coulson, President, or
Leslie Richardson, Financial Writer
CCG Elite
Tel: +1-310-231-8600 x103
Email: crocker.coulson@ccgir.com
