HARBIN, China, May 14 /PRNewswire-Asia/ -- China Sky One Medical, Inc. ("China Sky One Medical" or "the Company") (Nasdaq: CSKI), a leading fully integrated pharmaceutical company in the People's Republic of China ("PRC"), today announced record financial results for the first quarter of 2009.
First Quarter 2009 Highlights
-- Total revenues doubled year-over-year to $24.8 million
-- Gross profit increased 96.7% year-over-year to $18.8 million
-- Operating income increased 86.1% to $9.1 million from $4.9 million a
year ago
-- Net income increased 87.4% year-over-year to $7.2 million, or $0.43 per
diluted share
-- Received SFDA approval to manufacture Calcium Folinate injection and
Policresulen vaginal suppositories
-- Received SFDA approval to enter into clinical trials for two new
traditional Chinese medicines, Paeonol gel and Mei Lu gel
-- Expanded the sale of its best-selling Sumei Slim Patch into South Korea
and Sudan
-- Signed an exclusive distribution agreement with Shaanxi Buchang Group
for Naftopidil dispersible tablets with an expected sales target of
$14.6 million over five years
"We are pleased to report another quarter of excellent results to start off 2009. We achieved record financial performance in the first quarter with strong increases in revenue and net income as we executed our business strategy and further established ourselves as a leading pharmaceutical company in China," said Mr. Yan-Qing Liu, Chairman and CEO of China Sky One Medical, Inc. "We continued to refine and enhance our distribution channels during the quarter and signed several distribution agreements for our products and expanded sales of our top-selling Sumei Slim Patch into South Korea and Sudan."
First Quarter 2009 Results
Total revenues doubled year-over-year to $24.8 million for the three months ended March 31, 2009. The increase was primarily attributable to the strong performance by the Company's sales agents as well as contributions from several successful business acquisitions in 2008. Sales of patch products, including its best-selling Sumei Slim Patch, rose 141% to $9.1 million in the first quarter of 2009, and accounted for 37% of revenue, up from 30% a year ago. Sales of ointments rose 242% year over year to $5.1 million, accounting for 20% of revenue, compared to 12% of revenue a year ago. Sprays and Bio-engineering products, including the Company's line of diagnostic testing kits, rose 55% and 70%, respectively, each accounting for 12% of revenue during the quarter. In keeping with its strategic goals, the Company decreased contract sales of non-manufactured products in 2008 in order to focus on higher margin proprietary products. Contract sales of non-manufactured products were discontinued in the three months ended March 31, 2009.
Gross profit in the first quarter of 2009 was $18.8 million, an increase of 97% over the same period a year ago. Gross margin was 76% of total revenues, a slight decrease compared to gross margin of 77% for the first quarter of 2008. The decrease was attributable to lower unit selling prices, by which the Company expects to maintain its competitiveness. The Company was able to negotiate lower purchase prices from its suppliers, which offset the decline in selling prices.
Operating expenses in the first quarter of 2009 were $9.7 million, up 107.1% from $4.7 million in the first quarter of 2008. The increase was mainly the result of higher selling, general and administrative expenses, which were primarily attributable to the increased costs of marketing our products, and higher research and development expenses, primarily due to additional clinical trials for its products and the development of patents to generate continued sales growth.
Operating income was $9.1 million for the first quarter of 2009, representing an 84.5% increase from $4.9 million in the first quarter of 2008. Operating margin was 36.4%, compared to 39.1% in the first quarter of 2008.
Provision for income taxes was $1.8 million in the first quarter of 2009, compared to $1.0 million in the same period last year.
Net income for the first quarter of 2009 was $7.2 million, or $0.43 per diluted share, compared to net income of $3.9 million, or $0.26 per diluted share, in the first quarter of 2008. Diluted earnings per share was calculated using a weighted average share count of 16.7 million in the first quarter of 2009, compared to 14.9 million a year ago.
Financial Condition
As of March 31, 2009, China Sky One had $48.8 million in cash and cash equivalents, approximately $65.9 million in working capital, and no debt. Stockholders' equity at March 31, 2009, was $102.3 million, a 7.8% increase over the $94.9 million recorded at December 31, 2008.
The Company generated $8.5 million in net cash flow from operating activities in the first quarter of 2009, up from $5.2 million in the corresponding period of 2008.
The Company is currently constructing a new corporate headquarters which will be completed in 2009 at an additional estimated cost of approximately $5 million. The Company plans to fund the project using internally generated funds.
Recent Events
On April 23, 2009, the Company announced that it obtained approvals from the State Food and Drug Administration (SFDA) in China for the production of Geranium ointment and Musk liniment for pain relief. The two products are estimated to contribute $0.8 million to revenues in 2009 and potentially much more in 2010.
As of May 4, 2009, the Research & Development project for the Company's Sudden Cardiac Death (SCD) Early Examination Kit had been appraised by the Heilongjiang Bureau of Science and Technology. This project represents one of the very few proprietary technologies in the bio-diagnostic field that is owned by the Chinese. Management expects to complete the new product application process within one year.
Business Outlook and Guidance
"We are confident about the prospects for our business in 2009 and will continue to focus on increasing market share by both strengthening and further refining our successful sales and distribution network, building and enhancing our brand image, and making strategic acquisitions that continue to support our growth," said Mr. Yan-Qing Liu, Chairman and CEO of China Sky One Medical, Inc.
"In 2009, we expect full year revenue to increase by 40%, or approximately $37.0 million, to $128-$130 million, driven by growth in all of our product sales categories. We expect that net income will increase to $38-$39 million, resulting in net profit margin of approximately 30%. We expect 2009 gross margin to be approximately 74% due to higher raw material costs," Mr. Yan-Qing Liu added.
Conference Call
The Company will conduct a conference call at 10:00 a.m. Eastern Daylight Time on Friday, May 15, 2009, to discuss its first quarter of fiscal year 2009 financial results. Joining Mr. Yan-Qing Liu, Chairman and CEO of China Sky One Medical, Inc., will be Stanley Hao, Chief Financial Officer.
To participate in this live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (888) 419-5570. International callers should call (617) 896-9871. The Conference Passcode is 455 090 46. If you are unable to participate in the call at that time, replay of the conference call will be available from Friday, May 15, 2009 at 12:00 p.m. Eastern until Friday, May 29, 2009. To access the replay, call (888) 286-8010. International callers should call (617) 801-6888. The Conference Replay Passcode is 464 826 92.
About China Sky One Medical, Inc.
China Sky One Medical, Inc., a Nevada corporation, is a holding company. The Company engages in the manufacturing, marketing and distribution of pharmaceutical, medicinal and diagnostic products. Through its wholly-owned subsidiaries, Harbin Tian Di Ren Medical Science and Technology Company, Harbin First Bio- Engineering Company Limited, Heilongjiang Tianlong Pharmaceutical, Inc. and Peng Lai Jin Chuang Pharmaceutical Company the Company manufactures and distributes over-the-counter pharmaceutical products, which make up its major revenue source. For more information, visit http://www.skyonemedical.com .
Safe Harbor Statement
Certain of the statements made in the press release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward- looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology. Such statements typically involve risks and uncertainties and may include financial projections or information regarding the progress of new product development. Actual results could differ materially from the expectations reflected in such forward-looking statements as a result of a variety of factors, including the risks associated with the effect of changing economic conditions in The People's Republic of China, variations in cash flow, reliance on collaborative retail partners and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products, and other risk factors detailed in reports filed with the Securities and Exchange Commission from time to time.
Financial Statements Below
China Sky One Medical, Inc. and Subsidiaries
Condensed Consolidated of Income and Other Comprehensive Income
For the Three Months Ended March 31, 2009 and 2008
Three Months Ended March 31,
2009 2008
Unaudited Unaudited
Revenues $ 24,833,692 $ 12,413,430
Cost of Goods Sold 6,040,918 2,860,428
Gross Profit 18,792,774 9,553,002
Operating Expenses
Selling, general and administrative 6,877,468 3,956,795
Depreciation and amortization 451,372 76,348
Research and development 2,412,780 669,833
Total operating expenses 9,741,620 4,702,976
Other Income (Expense)
Other income -- 63,048
Interest expense 11,823 (1,147)
Total other income (expense) 11,823 61,901
Net Income Before Provision for Income Tax 9,062,977 4,911,927
Provision for Income Taxes
Current 1,820,139 1,047,016
Net Income 7,242,838 3,864,911
Basic Earnings Per Share 0.44 0.28
Basic Weighted Average Shares Outstanding 16,413,920 13,732,269
Diluted Earnings Per Share 0.43 0.26
Diluted Weighted Average Shares Outstanding 16,665,221 14,888,310
Comprehensive Income
Net Income 7,242,838 3,864,911
Foreign currency translation adjustment 116,942 1,620,516
Comprehensive Income 7,359,780 5,485,427
China Sky One Medical, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
March 31, December 31,
2009 2008
(Unaudited) (Audited)
ASSETS
Current Assets
Cash and cash equivalents $48,788,597 $40,288,116
Accounts receivable, net 14,077,827 14,978,648
Inventories 1,320,295 462,351
Prepaid and other current assets 77,726 106,386
Land and construction deposit 8,523,979 8,513,284
Total current assets 72,788,424 64,348,785
Property and equipment, net 20,907,074 21,058,779
Intangible assets, net 15,531,498 15,851,765
$109,226,996 $101,259,329
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Accounts payable and accrued expenses $ 3,702,703 $ 2,937,068
Taxes payable 3,202,051 3,362,888
Deferred revenues -- 26,079
Total current liabilities 6,904,754 6,326,035
Commitments and Contingencies
Stockholders’ Equity
Preferred stock ($0.001 par value, 5,000,000
shares authorized, none issued and outstanding) -- --
Common stock ($0.001 par value, 50,000,000
shares authorized, 16,446,467 and 16,306,184
issued and outstanding, respectively) 16,446 16,306
Additional paid-in capital 40,134,162 40,105,134
Accumulated other comprehensive income 5,683,748 5,566,806
Retained earnings 56,487,886 49,245,048
Total stockholders’ equity 102,322,242 94,933,294
$109,226,996 $101,259,329
China Sky One Medical, Inc. and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Three Months Ended March 31,
2009 2008
Cash flows from operating activities
Net Income $ 7,242,838 $ 3,864,911
Adjustments to reconcile net cash
provided by operating activities
Depreciation and amortization 588,066 140,009
Share-based compensation expense -- 10,117
Net change in assets and liabilities
Accounts receivables 912,487 1,859,639
Inventories (857,238) (408,079)
Prepaid expenses and other current assets 35,805 5,526
Accounts payable and accrued expenses 735,730 (370,378)
Taxes payable (165,038) 102,786
Deferred revenues -- (6,952)
Net cash provided by operating activities 8,492,650 5,197,579
Cash flows from investing activities
Purchases of fixed assets (66,148) (42,782)
Land and construction deposit -- (710,656)
Purchase of subsidiary-Heilongjiang Haina
Pharmaceutical, Inc. -- (427,838)
Cash of subsidiary upon acquisition -- 82,715
Purchase of intangible assets (3,651) (7,139)
Net cash used in investing activities (69,799) (1,105,700)
Cash flows from financing activities
Sale of common stock for cash, net of
offering costs -- 23,487,963
Proceeds from warrants conversion 29,169 739,588
Net cash provided by financing activities 29,169 24,227,551
Effect of exchange rate changes on cash 48,462 727,694
Net increase in cash and cash equivalents 8,500,481 29,047,124
Cash and cash equivalents at
beginning of period 40,288,116 9,190,870
Cash and cash equivalents at end of period $48,788,597 $38,237,994
Supplemental disclosure of cash flow
information
Interest paid $ -- $ 1,157
Taxes paid $ 2,106,956 $ 944,230
For more information, please contact:
Company Contact:
China Sky One Medical, Inc.
Mr. Yu-Bo Hao, CFO
Tel: +86-451-5399-4069
Email: china_sky_one@yahoo.cn
Investor Relations Contact:
CCG Investor Relations
Mr. Crocker Coulson, President
Tel: +1-646-213-1915
Email: crocker.coulson@ccgir.com
Web: http://www.ccgirasia.com
