HARBIN, China, April 15 /PRNewswire-Asia-FirstCall/ -- China Sky One Medical, Inc. ("China Sky One Medical" or "the Company") (Nasdaq: CSKI), a leading fully integrated pharmaceutical company producing over-the-counter drugs in the People's Republic of China ("PRC"), today announced record financial results for the fourth quarter and fiscal year ended December 31, 2008.
Fourth Quarter 2008 Highlights
-- Total revenues increased 104.0% year-over-year to $26.0 million
-- Gross profit increased 95.2% year-over-year to $19.3 million
-- Operating income increased 80.4% to $8.9 million from $4.9 a year ago
-- Net income increased 68.8% year-over-year to $6.9 million, or $0.45 per
diluted share
Full Year 2008 Highlights
-- Total revenues increased 86.2% to $91.8 million
-- Gross profit increased 80.9% to $69.4 million
-- Operating income increased 91.6% to $35.7 million
-- Net income increased 88.2% to $28.9 million, or $1.87 per diluted share
-- Common shares began trading on the NASDAQ Global Market under the
symbol "CSKI" on September 15, 2008
-- Completed the acquisitions of Heilongjiang Tianlong Pharmaceuticals
Inc., Heilongjiang Haina Pharmaceuticals Inc., and Peng Lai Jin Chuang
Pharmaceutical Company
-- Received SFDA final approval for 19 drugs
-- Reached an agreement to acquire a proprietary breast drug from Harbin
Medical University
"We are happy to report another quarter of excellent results and a very strong year filled with many accomplishments. We achieved record financial performance in 2008 with significant increases in revenue and net income as we successfully executed our business strategy and made solid progress in establishing ourselves as a leading pharmaceutical company in China," said Mr. Yan-Qing Liu, Chairman and CEO of China Sky One Medical, Inc. "As part of our strategy, we made a number of important strategic acquisitions that contributed to our growth and signed several distribution agreements for our top selling products. We also continued to build and enhance our brand awareness through a successful marketing and advertising campaign that helped to increase demand for our products."
Fourth Quarter 2008 Results
China Sky One's total revenues increased 104.0% in the fourth quarter to $26.0 million. This was mainly a result of the Company's continued efforts to develop and enhance its sales distribution channels and to insure that its sales agents and products are visible by those making or influencing key purchasing decisions.
Gross profit in the fourth quarter was $19.3 million, an increase of 95.2% on a year-over-year basis. Gross margin decreased to 74.4% of total revenues from 77.7% in the fourth quarter of 2007. The decrease was attributable to lower unit selling prices in 2008, by which the Company aims to maintain the competitiveness in the PRC markets. However, the Company was able to negotiate a lower purchase price from its suppliers.
Operating expenses in the fourth quarter of 2008 were $10.4 million, up 110.0% from $4.9 million in the fourth quarter of 2007. The increase was primarily the result of higher selling, general and administrative expenses associated with the Company's sales growth, and an increase in R&D spending during the quarter. Research and development expenses were $2.7 million in the fourth quarter, compared to $1.4 million in the fourth quarter of 2007.
Operating income was $8.9 million, representing an 80.4% increase from $4.9 million in the fourth quarter of 2007. Operating margin was 34.4%, compared to 38.9% in the fourth quarter of 2007.
Provision for income taxes was $2.1 million in the fourth quarter of 2008, compared to $0.9 million in the same period last year.
Net income for the fourth quarter of 2008 was $6.9 million, or $0.45 per diluted share, compared to net income of $4.1 million, or $0.25 per diluted share, in the fourth quarter of 2007.
Full Year 2008 Results
For the full year 2008, total revenues were $91.8 million, up 86.1% from $49.3 million in 2007. Product sales increased 137% year-over-year to $86.2 million, or 93.8% of total revenues, and contract sales decreased 56.5% year-over-year to $5.7 million, or 6.2% of total revenues, in 2008.
Gross profit for the full year 2008 was $69.4 million, an increase of 80.9% from $38.4 million in 2007. Gross profit margin was 75.6% in 2008 compared to 77.8% in 2007.
Operating income was $35.7 million, up 91.6% from $18.6 million in 2007. Operating margin was 38.8%, up from 37.7% in 2007.
Net income for 2008 was $28.9 million, or $1.87 per diluted share, compared to net income of $15.3 million, or $1.15 per diluted share, in the year 2007.
Financial Condition
As of December 31, 2008, China Sky One had $40.3 million in cash and equivalents, approximately $58.0 million in working capital, and no debt. Stockholders' equity at December 31, 2008, was $94.9 million, a 194.4% increase over the $32.2 million recorded at December 31, 2007. In 2008, the Company raised approximately $23.5 million in net proceeds under a January 2008 private placement of equity.
The Company generated $27.5 million in net cash flow from operating activities in 2008, up from $11.6 million in 2007.
Recent Events of 2009
In January, the Company qualified for a preferential income tax rate of 15%, versus the regular rate of 25%, when three of its wholly-owned subsidiaries -- Harbin Tian Di Ren Medical Science and Technology ("TDR"), Heilongjiang Tianlong Pharmaceutical ("Tianlong"), and Harbin First Bioengineering ("First") -- were granted the High-Technology Enterprise Certificate by the provincial government in Heilongjiang Province.
In February, the Company's wholly-owned subsidiary, Peng Lai Jin Chuang Pharmaceutical Company ("Jin Chuang"), signed an exclusive distribution agreement with Shaanxi Buchang Group ("Buchang") for naftopidil dispersible tablets with an expected sales target of 100 million RMB (US $14.6 million) over five years. Jin Chuang received SFDA approval to produce and distribute naftopidil dispersible tablets, which are used to treat benign enlargement of the prostate, in 2005. Also in February, the Company announced that it had expanded the sale of its best-selling Slim Patch into South Korea and Sudan after engaging PAX-Medicare and Lai Li Investment Company as exclusive sales agents. The product is now available in 26 countries and regions.
In March, the Company announced that it received SFDA approval to manufacture two new drugs, Calcium Folinate injection, intended as an auxiliary therapy for sprue, (a disease of the small intestine), infancy-related megaloblastic anemia, and colonic and rectal cancer; and Policresulen vaginal suppositories indicated for the treatment of cervical erosion, cervicitis, and various vaginal inflammations.
2009 Outlook
"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 Thursday, April 16, 2009 to discuss its fourth quarter and fiscal year 2008 results. To participate in the call, please dial the following number five to ten minutes prior to the scheduled call time: 866-573-1052. International callers should dial 404-537-3305. The conference ID for this call is 95492620. If you are unable to participate in the call at this time, a replay will be available for fourteen days starting on Thursday, April 16, 2009 at 12:00 p.m. Eastern Daylight Time. To access the replay, dial 800-642-1687, international callers dial 706 645-9291, conference ID 95492620.
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.
CHINA SKY ONE MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND TWELVE MONTHS ENDED DECEMBER 31, 2008 AND 2007
Three Months Ended Years Ended
December 31, December 31,
2008 2007 2008 2007
(Unaudited) (Audited)
Revenues $25,954,879 $12,723,375 $91,816,183 $49,318,308
Cost of Goods Sold 6,654,502 2,835,176 22,403,303 10,939,531
Gross Profit 19,300,377 9,888,199 69,412,880 38,378,777
Operating Expenses
Selling, general
and administrative 7,341,394 3,365,194 25,482,201 16,163,577
Depreciation and
amortization 335,031 166,556 858,406 443,063
Research and
development 2,693,341 1,406,727 7,412,895 3,158,351
Total
operating
expenses 10,369,766 4,938,477 33,753,502 19,764,991
Income From Operations 8,930,661 4,949,722 35,659,378 18,613,786
Other Income (Expense)
Miscellaneous
income 110,598 40,517 813,704 38,332
Net Income Before
Provision for Income
Tax 9,041,209 4,990,239 36,473,082 18,652,118
Provision for Income
Taxes
Current 2,103,309 885,209 7,616,169 3,319,173
Net Income $6,937,901 $4,109,829 $28,856,914 $15,332,945
Basic Earnings Per Share $ 0.45 $ 0.34 $ 1.91 $ 1.27
Basic Weighted Average
Shares Outstanding -- -- 15,101,833 12,094,949
Diluted Earnings Per
Share $ 0.45 $ 0.25 $ 1.87 $ 1.15
Diluted Weighted
Average Shares
Outstanding 16,566,776 13,907,696 15,429,136 13,370,528
China Sky One Medical, Inc. and Subsidiaries
Consolidated Balance Sheet
December 31, 2008 December 31, 2007
ASSETS
Current Assets
Cash and cash equivalents $40,288,116 $9,190,870
Accounts receivable 14,978,648 10,867,106
Inventories 462,351 371,672
Prepaid and other current assets 106,386 57,907
Land and construction deposit 8,513,284 8,003,205
Total current assets 64,348,785 28,490,760
Property and equipment, net 21,058,779 6,861,432
Intangible assets, net 15,851,765 1,933,014
$101,259,329 $37,285,206
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and
accrued expenses $2,937,068 $3,448,701
Taxes payable 3,362,888 1,567,188
Deferred revenue 26,079 24,504
Total current
liabilities 6,326,035 5,040,393
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, 16,306,184 and
12,228,363 issued and
outstanding, respectively) 16,306 12,228
Additional paid-in capital 40,105,134 9,572,608
Accumulated other
comprehensive income 5,566,806 2,271,843
Retained earnings 49,245,048 20,388,134
Total stockholders'
equity 94,933,294 32,244,813
$101,259,329 $37,285,206
China Sky One Medical, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
Years Ended December 31,
2,008 2,007
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $28,856,914 $15,332,945
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Allowance for bad debt 37,883 --
Depreciation and amortization 858,406 443,063
Share-based compensation
expenses 315,662 235,468
Decrease (increase) in operating
assets:
Accounts receivable and other
receivables (3,398,228) (7,478,964)
Inventories (65,762) (73,142)
Prepaid expenses and others (23,840) 93,463
Land and construction deposit 4,084 --
Increase (decrease) in operating
liabilities:
Accounts payable and accrued
liabilities (677,722) 2,136,356
1,660,382 960,170
Deferred revenue (25,674) (47,879)
Net cash provided (used) by
operating activities 27,538,021 11,601,480
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (11,167,396) (2,222,448)
Purchase of land use rights 4,084 (8,003,205)
Purchase of intangible assets (11,951,210) (35,280)
Net cash provided (used) by
investing activities (23,114,522) (10,260,933)
CASH FLOWS FROM FINANCING ACTIVITIES
Sales of common stock for cash,
net of offering costs 23,487,963 --
Proceeds from warrants
conversion 1,867,507 515,834
Payment to short-term loan -- (548,350)
Net cash provided (used) by
financing activities 25,355,470 (32,516)
Effect of exchange rate changes on
cash 1,318,277 1,296,039
NET INCREASE IN CASH AND CASH
EQUIVALENTS $31,097,246 $2,604,070
CASH AND CASH EQUIVALENTS AT
BEGINNING OF YEAR 9,190,870 6,586,800
CASH AND CASH EQUIVALENTS AT END OF
YEAR $40,288,116 $9,190,870
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
