HAIKOU CITY, China, Nov. 7 /Xinhua-PRNewswire-FirstCall/ -- China Pharma Holdings, Inc. ("China Pharma") (OTC Bulletin Board: CPHI), which develops, manufactures, and markets generic and branded speciality pharmaceutical products in China, today announced financial results for the quarter ended September 30, 2008.
Financial Highlights
-- 3Q08 Revenue of $12.6 Million, up 52.0% Year-over-Year
-- $35.6 Million Revenue for nine months ended September 30, up 47.76%
versus same period in 2007
-- 3Q08 Net Income up 37.8% Year-over-Year; up 42.05% in nine months ended
September 30 versus same period in 2007
-- 3Q08 Diluted EPS $0.10 versus 3Q07 Diluted EPS $0.08
-- Diluted EPS $0.32 versus Diluted EPS $0.24 for nine months ended
September 30, 2008 and 2007, respectively
-- 3Q08 Sales of PuSenOK(TM), China's first and only generic version of
Aleve-D(R), Up 124.2% Year-over-Year
Recent and Upcoming Events
-- Clinical Trials of Novel Antibiotic Combination Approved by SFDA and
Initiated
-- AMEX Listing Plans Underway
-- Two-Week U.S. Tour in November 2008 to Present at Conferences and Meet
Investors
Revenue for the third quarter of 2008 increased 52.05% to $12.61 million, compared to $8.29 million in the same period of 2007 and above management's prior guidance for revenue growth of 40%-45%. The increase reflected the expansion of marketing and promotional activities aimed at increasing the sales of existing products, in addition to the Company's increase in pharmaceutical market share from the introduction of new products. Top contributors to the increase in revenue were the Company's branded product PuSenOK(TM), the first and only generic version of Aleve-D(R) available in China; Buflomedil, a treatment for peripheral blood vessel diseases; Roxithromycin dispersible tablet, a macrolide antibiotic; and Bumetanide, a diuretic approved by the SFDA in January 2008 for the treatment of edema caused by heart disease and hypertension. The Company continues to focus on expanding its capacity and distribution networks to support the development, manufacturing and sales of additional products.
Operating expenses in the third quarter of 2008 totaled $1.42 million, up 87.89% from approximately $0.76 million in the comparable period of 2007. The main reason was $0.46 million in Allowance for Bad Debt for this period, because in the same period last year, a substantial amount of aged receivables was collected, making that period's Allowance for Bad Debt, negative $0.17 million. Operating income in the third quarter of 2008 was approximately $4.7 million, an increase of 50.29% from approximately $3.1 million in the same period of 2007, while operating margin was approximately 37.23%, compared to 37.66% in the third quarter of 2007.
Gross profit in the third quarter of 2008 was approximately $6.12 million, up 57.62% compared to approximately $3.88 million in the third quarter of 2007. Gross margin was approximately 48.5%, higher than 46.79% in the prior year's period, and above the pharmaceutical industry's average of 34.2%.
Net income for the third quarter of 2008 rose 37.82% to approximately $4.25 million, or $0.10 per basic and diluted share, compared to $3.08 million, or $0.08 per basic and diluted share, in the same period a year ago. Diluted share count in the third quarter of 2008 was approximately 42.3 million, compared to approximately 37.2 million in the third quarter of 2007.
President and CEO, Ms. Zhilin Li, commented, "We are confident that our continued strong revenue growth for the third quarter of 2008 is a reflection of our focus on the largest segments of China's pharmaceutical market, in disease areas of high incidence and high mortality. Our rapid growth is supported by the ongoing delivery of new products, product technology, and branding. We are competitive within China's highly fragmented pharmaceutical market due to our high margin and low cost business model, which is supported by our scalable manufacturing infrastructure and diverse product portfolio based on market demand. Our near-term strategy is to maintain rapid growth by investing in marketing and promotional activities to increase sales and market share, expanding distribution, and developing competitive new products."
Recent and Upcoming Milestones
Clinical Trials of Novel Antibiotic Combination Approved by SFDA and Initiated
In November 2008, the Company initiated clinical trials of its novel antibiotic combination formula after the SFDA completed its technical analyses and cleared the product for clinical trials. The novel antibiotic combination is a third generation Cephalosporin antibiotic formulated with a bacterial-enzyme inhibitor for the treatment of infections. The inclusion of a bacterial-enzyme inhibitor gives it the potential to address antibiotic-resistant infections, which are on the rise in China.
AMEX Listing Plans Underway
The Company is confident that it meets AMEX listing requirements pending compliance with minimum bid price rules. During senior management's trip to the U.S., the team will continue to discuss listing preparations with specialists and advisors.
Two-Week U.S. Tour in November 2008 to Present at Conferences and Meet Investors
Ms. Zhilin Li, President and CEO, will visit the U.S. for the first time with senior management to meet investors and participate in two investor conferences. The U.S. tour will begin on November 10, 2008 in New York City, where management will present at Rodman and Renshaw's Annual Global Investment Conference. Management will visit investors in several other cities, including Los Angeles and San Francisco. The tour will conclude on November 21, 2008 in Las Vegas, Nevada, where management will present at Roth Capital's "China Comes to Vegas" conference. Management is available during each conference and in each city for one-on-one meetings.
"I am looking forward to meeting with our current and potential investors, during my first visit to the U.S.," added Ms. Li. "I am eager to discuss our recent accomplishments, particularly those we have highlighted today. The success of PuSenOK as the only generic Aleve-D in China has significantly increased the brand recognition of China Pharma Holdings, which we expect to benefit our current and future products on the market. We are also actively advancing our research and development pipeline, as demonstrated by the recent initiation of clinical trials for our novel antibiotic combination. The company's sustained development strategy is to focus on specific markets and strengthen our competitive advantages through the further development of products technology and brand creation, and by deepening the penetration of our distribution network while taking full advantage of growth opportunities emerging from China's recent healthcare reforms."
Conference Call Details
The Company will hold a conference call today at 10:00 a.m. ET. To participate in the conference call, please dial 1-800-591-6945 (USA) or +1-617-614-4911 (International), Conference Passcode 57906502. In addition, a dial-up replay of the conference call will be available beginning November 7, 2008 at 12:00 p.m. ET and ending on November 14, 2008. The replay telephone number is 1-888-286-8010 (USA) or +1-617-801-6888 (International), Conference Passcode: 19590263.
This conference call will be broadcast live over the Internet and can be accessed by clicking this link:
http://phx.corporate-ir.net/playerlink.zhtml?c=145098&s=wm&e=2018680 . A replay will also be available shortly after the call on China Pharma's website http://www.chinapharmaholdings.com .
About China Pharma Holdings, Inc.
China Pharma Holdings, Inc. is a specialty pharmaceutical company with rapidly growing profit that develops, manufactures, and markets treatments for a wide range of high incidence and high mortality conditions in China, including cardiovascular, CNS, infectious, and digestive diseases. The Company's cost-effective, high margin business model is driven by market demand and supported by eight scalable GMP-certified product lines covering the major dosage forms. In addition, the Company has a broad and expanding distribution network across 30 provinces, municipalities and autonomous regions. The Company is registered in Delaware, USA. Hainan Helpson Bio-pharmaceutical Co., Ltd (Helpson), located in Haikou City, Hainan Province, China, is a wholly owned subsidiary of China Pharma Holdings, Inc. For more information about China Pharma Holdings, Inc., please visit http://www.chinapharmaholdings.com .
CHINA PHARMA HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
September 30, December 31,
2008 2007
(Restated)
ASSETS
Current Assets:
Cash and cash equivalents $5,838,678 $1,830,335
Trade accounts receivable, less
allowance for doubtful accounts
of $4,124,577 and
$2,440,852, respectively 31,670,231 18,572,976
Other receivables, less allowance for
Doubtful accounts of $98,151
and $43,908,respectively 189,794 413,596
Advances to suppliers 2,276,440 2,757,320
Inventory 14,542,799 14,448,771
Total Current Assets 54,517,942 38,022,998
Non-current Assets:
Property and equipment, net of
accumulated depreciation of
$1,350,913 and $1,003,802,
respectively 2,619,965 2,625,216
Intangible assets, net of accumulated
amortization of $465,132 and
$221,715, respectively 2,432,253 2,063,252
Advances for purchases of
intangible assets 6,840,631 807,345
Deferred tax assets 413,890 187,509
Total Non-current Assets 12,306,739 5,683,322
TOTAL ASSETS $66,824,681 $43,706,320
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable $505,704 $297,299
Accrued expenses 47,450 261,301
Accrued taxes payable 946,948 311,009
Other payables 130,652 86,161
Advances from customers 674,135 261,583
Short-term notes payable -- 2,693,428
Total Current Liabilities 2,304,889 3,910,781
Research and development commitments 36,381 34,181
Total Liabilities 2,341,270 3,944,962
Stockholders' Equity:
Common stock, $0.001 par value,
60,000,000 shares authorized,
42,278,938 and 37,278,938 shares
issued and outstanding, respectively 42,279 37,279
Additional paid-in capital 21,062,586 11,678,606
Foreign currency translation
adjustment 5,693,059 2,839,304
Retained earnings 37,685,487 25,206,169
Total Stockholders' Equity 64,483,411 39,761,358
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $66,824,681 $43,706,320
CHINA PHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME
(unaudited)
For the three months For the nine months
ended September 30, ended September 30,
2008 2007 2008 2007
Revenue $12,610,642 $8,293,497 $35,606,490 $24,097,521
Cost of revenue 6,494,266 4,413,052 17,730,026 13,018,566
Gross profit 6,116,376 3,880,445 17,876,464 11,078,955
Operating expenses:
Selling expenses 529,432 591,193 1,323,854 896,128
General and
administrative 427,399 328,743 1,226,888 927,162
Research and
development 5,581 5,941 42,807 5,942
Bad debt expense, net
of recoveries 459,500 (169,095) 1,539,313 910,718
Total operating
expenses 1,421,912 756,782 4,132,862 2,739,950
Income from operations 4,694,464 3,123,663 13,743,602 8,339,005
Non-operating income
(expenses):
Interest income 26,224 4,400 31,259 29,808
Interest expense (34,629) (50,857) (130,342) (166,698)
Other (expense) income (9,588) 7,549 (87,038) 582,827
Total non-operating
income (expense) (17,993) (38,908) (186,121) 445,937
Income before taxes 4,676,471 3,084,755 13,557,481 8,784,942
Income tax expense 424,993 -- 1,078,163 --
Net income $4,251,478 $3,084,755 $12,479,318 $8,784,942
Comprehensive income --
foreign currency
translation
adjustments 133,713 570,646 2,853,755 1,222,329
Comprehensive income $4,385,191 $3,655,401 $15,333,073 $10,007,271
Basic and Diluted
Earnings Per Share $0.10 $0.08 $0.32 $0.24
Basic and Diluted
Weighted Average
Shares Outstanding 42,278,938 37,228,938 39,523,464 36,935,208
CHINA PHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
For the nine months ended
September 30,
2008 2007
Cash Flows from Operating Activities: (Restated)
Net income $12,479,318 $8,784,942
Depreciation and amortization 505,595 322,098
Compensation paid with warrants 120,042 --
Gain on sale of intangibles -- (572,446)
Changes in assets and liabilities:
Trade accounts receivable (11,610,177) (4,440,513)
Other receivables 246,329 223,329
Advances to suppliers 651,833 (2,504,684)
Inventory 855,485 (2,965,836)
Deferred tax assets (209,434) --
Deferred offering costs -- 60,487
Trade accounts payable 184,627 279,420
Accrued expenses (138,021) 83,034
Accrued taxes payable 602,480 --
Other payables (48,535) (134,647)
Advances from customers 386,922 47,448
Net Cash from Operating Activities 4,026,464 (817,368)
Cash Flows from Investing Activities:
Purchase of property and equipment (125,753) (77,313)
Purchase of intangible assets (428,641) (1,993,288)
Advances for purchases of intangibles (5,856,412) --
Net Cash from Investing Activities (6,410,806) (2,070,601)
Cash Flows from Financing Activities:
Proceeds from sale of common stock
and warrants 9,268,938 3,797,183
Payments of short term notes payable (2,814,744) --
Net Cash Proceeds from Financing
Activities 6,454,194 3,797,183
Effect of Exchange Rate Changes on
Cash (61,509) 149,995
Net Change in Cash 4,008,343 1,059,209
Cash and Cash Equivalents at
Beginning of Period 1,830,335 656,441
Cash and Cash Equivalents at End of
Period $5,838,678 $1,715,650
Supplemental Cash Flow Disclosure:
Cash paid for interest $130,342 $115,841
Cash paid for income taxes 1,289,596 --
Safe Harbor Statement
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.
For further information, please contact:
China Pharma Holdings, Inc.
Diana Huang
Tel: +86-898-6681-1730
Email: hps@chinapharmaholdings.com
The Ruth Group
Sara Ephraim
Tel: +1-646-536-7002
Email: sephraim@theruthgroup.com
