HAIKOU, China, April 3, 2018 /PRNewswire/ -- China Pharma Holdings, Inc. (NYSE MKT: CPHI) ("China Pharma," the "Company" or "We"), an NYSE American listed corporation with a fully-integrated specialty pharmaceuticals subsidiary based in China, today announced financial results for the fiscal year ended December 31, 2017.
Full Year Highlights
"We tried to increase sales in 2017 but the speed of our sales recovery was not as fast as we expected. Nevertheless, increasing sales remains our top priority. Management will continue to vigorously promote sales through active participation in recent provincial market openings to receive new drug tender offers and through further research of the basic medical market," said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms. Li continued, "The ongoing generic drug consistency evaluations and reform of China's drug production registration and review policies will have a major impact on the future development of our industry and may change its business patterns. Under the requirements of the consistency evaluation policy, the company actively evaluated the technical difficulty, investment demand, time requirement, and investment return rate of all applicable marketed products and pipeline products, and recognized a significant impairment loss related to our intangible assets in 2017. We will continue to actively adapt to state policy guidance and further evaluate market conditions for our current existing products, pipeline products, and competition in the market in order to optimize our development strategy."
Full Year Results
Revenue decreased by 15.2% to $13.2 million for the year ended December 31, 2017, as compared to $15.6 million for the year ended December 31, 2016. This decrease was mainly due to the negative impact around Health-care insurance cost-control as well as policies for reducing the proportion of drug cost to total health-care spending.
Gross profit for the year ended December 31, 2017 was $2.5 million, compared to $3.2 million in 2016. Our gross profit margin in 2017 was 18.7% compared to 20.7% in 2016. This decline in our gross profit margin was mainly due to that our raw material prices have generally increased in recent quarters along with the improvement of industry standards and the strengthening of environmental protection requirements. In addition, adverse drug pricing control policies have negatively impacted our gross margins.
Our selling expenses for the year ended December 31, 2017 were $3.5 million, a decrease of $0.5 million compared to $4.0 million for the year ended December 31, 2016. Selling expenses accounted for 26.2% of the total revenue in 2017 compared to 25.9% in 2016. The increase was mainly the result of additional marketing, consulting and product promotional efforts in certain Chinese provinces. Because of adjustments in our sales practices resulting from healthcare reform policies, despite the overall decrease in sales, we require additional personnel and expenses to support our sales and the collection of accounts receivable.
Our general and administrative expenses for the year ended December 31, 2017 were $2.0 million, which represented an increase of $0.3 million compared to $2.3 million in 2016. General and administrative expenses accounted for 15.3% and 14.6% of our total revenues in 2017 and 2016, respectively.
Our bad debt expenses for the year ended December 31, 2017 was $1.4 million, which represented an increase of $0.3 million compared to $1.1 million in 2016. The increase in our bad debt expenses was mainly due to the change in the composition of aging of accounts receivables for the years ended December 31, 2017 compared to December 31, 2016.
Our impairments for the year ended December 31, 2017 were $14.2 million, compared to $4.0 million in 2016. It was mainly because of that as a pharmaceutical company, we have been focusing on the development and maintenance of our intangible assets, mainly in the form of medical formulas. Because of recently implemented government policies such as consistency evaluations, our management made certain assessments regarding the impairment of our intangible assets as of December 31, 2017 and December 31, 2016 respectively, and identified six and five formulas that would likely be unable to generate positive cash flow in the foreseeable future and therefore recognized impairment loss on them accordingly.
Net loss for year ended December 31, 2017 was $19.3 million, compared to net loss of $9.2 million for the year ended December 31, 2016. The decrease in net loss was mainly a result of the increase in impairment loss and bad debt expenses.
Financial Condition
As of December 31, 2017, the Company had cash and cash equivalents of $2.0 million compared to $2.7 million as of December 31, 2016. Working capital decreased to $3.1 million as of September 30, 2017 from $7.1 million as of December 31, 2016; and the current ratio was 1.3 and 1.7 times at December 31, 2017 and December 31, 2016, respectively.
As of December 31, 2017, our net accounts receivable was $2.3 million, compared to $4.0 million as of December 31, 2016.
For the year ended December 31, 2017, cash flow from operating activities was $0.8 million, as compared to $2.9 million in 2016.
Conference Call
The Company will hold a conference call at 8:30 am E.T. on April 3, 2018 to discuss the results of full year 2017. Listeners may access the call by dialing 1-866-519-4004 or 65-671-350-90 for international callers, Conference ID # 1264719. A replay of the call will be accessible through April 11, 2018 by dialing 1-855-452-5696 or 61-281-990-299 for international callers, Conference ID # 1264719.
About China Pharma Holdings, Inc.
China Pharma Holdings, Inc. is a specialty pharmaceutical company that develops, manufactures and markets a diversified portfolio of products focused on conditions with a high incidence and high mortality rates 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 new GMP-certified product lines covering the major dosage forms. In addition, the Company has a broad and expanding nationwide distribution network across all major cities and provinces in China. The Company's wholly-owned subsidiary, Hainan Helpson Medical & Biotechnology Co., Ltd., is located in Haikou City, Hainan Province. For more information about China Pharma Holdings, Inc., please visit www.chinapharmaholdings.com. The Company routinely posts important information on its website.
Safe Harbor Statement
Certain statements in this press 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 the achievability of financial guidance, success of new product development, unanticipated changes in product demand, increased competition, downturns in the Chinese economy, uncompetitive levels of research and development, 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 except as required by applicable law or regulation.
Contact:
China Pharma Holdings, Inc.
Ms. Diana Na Huang
Phone: +86-898-6681-1730 (China)
Email: hps@chinapharmaholdings.com
- FINANCIAL TABLES FOLLOW -
| CHINA PHARMA HOLDINGS, INC. |
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| CONSOLIDATED BALANCE SHEETS |
||||
| December 31, |
December 31, |
|||
| 2017 |
2016 |
|||
| ASSETS |
||||
| Current Assets: |
||||
| Cash and cash equivalents |
$ 2,030,214 |
$ 2,665,802 |
||
| Restricted cash |
709,796 |
1,088,879 |
||
| Banker's acceptances |
39,867 |
- |
||
| Trade accounts receivable, less allowance for doubtful |
||||
| accounts of $18,209,734 and $15,664,496, respectively |
2,293,120 |
3,999,809 |
||
| Other receivables, less allowance for doubtful |
||||
| accounts of $40,010 and $71,548, respectively |
162,981 |
224,373 |
||
| Advances to suppliers |
461,307 |
2,003,792 |
||
| Inventory |
6,407,155 |
7,310,939 |
||
| Prepaid expenses |
185,647 |
226,357 |
||
| Total Current Assets |
12,290,087 |
17,519,951 |
||
| Advances for purchases of intangible assets |
23,722,954 |
35,498,059 |
||
| Property and equipment, net |
23,541,003 |
24,967,448 |
||
| Intangible assets, net |
398,856 |
534,682 |
||
| TOTAL ASSETS |
$ 59,952,900 |
$ 78,520,140 |
||
| LIABILITIES AND STOCKHOLDERS' EQUITY |
||||
| Current Liabilities: |
||||
| Trade accounts payable |
$ 1,141,138 |
$ 3,060,374 |
||
| Accrued expenses |
276,368 |
139,830 |
||
| Other payables |
2,858,701 |
2,502,694 |
||
| Advances from customers |
581,132 |
811,232 |
||
| Other payables - related parties |
1,354,567 |
1,354,567 |
||
| Current portion of construction loan facility |
2,305,430 |
1,440,154 |
||
| Bankers' acceptance notes payable |
709,796 |
1,088,879 |
||
| Total Current Liabilities |
9,227,132 |
10,397,730 |
||
| Non-current Liabilities: |
||||
| Construction loan facility |
6,916,291 |
8,640,927 |
||
| Deferred tax liability |
738,175 |
572,349 |
||
| Total Liabilities |
16,881,598 |
19,611,006 |
||
| Stockholders' Equity: |
||||
| Preferred stock, $0.001 par value; 5,000,000 shares authorized; |
||||
| no shares issued or outstanding |
- |
- |
||
| Common stock, $0.001 par value; 95,000,000 shares authorized; |
||||
| 43,579,557 shares and 43,579,557 shares outstanding, respectively |
43,580 |
43,580 |
||
| Additional paid-in capital |
23,590,204 |
23,590,204 |
||
| Retained earnings |
5,479,809 |
24,757,374 |
||
| Accumulated other comprehensive income |
13,957,709 |
10,517,976 |
||
| Total Stockholders' Equity |
43,071,302 |
58,909,134 |
||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |
$ 59,952,900 |
$ 78,520,140 |
||
| CHINA PHARMA HOLDINGS, INC. |
||||
| CONSOLIDATED STATEMENTS OF OPERATIONS |
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| AND COMPREHENSIVE INCOME (LOSS) |
||||
| For the Year |
||||
| Ended December 31, |
||||
| 2017 |
2016 |
|||
| Revenue |
$ 13,212,314 |
$ 15,570,514 |
||
| Cost of revenue |
10,743,764 |
12,352,004 |
||
| Gross profit |
2,468,550 |
3,218,510 |
||
| Operating expenses: |
||||
| Selling expenses |
3,460,596 |
4,036,590 |
||
| General and administrative expenses |
2,019,949 |
2,265,851 |
||
| Research and development expenses |
90,474 |
365,969 |
||
| Bad debt expense |
1,393,576 |
1,086,449 |
||
| Impairment loss |
14,183,969 |
3,962,141 |
||
| Total operating expenses |
21,148,564 |
11,717,000 |
||
| Subsidy income |
- |
343,023 |
||
| Loss from operations |
(18,680,014) |
(8,155,467) |
||
| Other income (expense): |
||||
| Interest income |
64,414 |
130,575 |
||
| Interest expense |
(539,334) |
(849,557) |
||
| Net other expense |
(474,920) |
(718,982) |
||
| Loss before income taxes |
(19,154,934) |
(8,874,449) |
||
| Income tax expense |
(122,631) |
(308,175) |
||
| Net loss |
(19,277,565) |
(9,182,624) |
||
| Other comprehensive income - foreign currency |
||||
| translation adjustment |
3,439,733 |
(4,549,391) |
||
| Comprehensive loss |
$ (15,837,832) |
$ (13,732,015) |
||
| Loss per share: |
||||
| Basic and diluted |
$ (0.44) |
$ (0.21) |
||
| Weighted average shares outstanding |
43,579,557 |
43,579,557 |
||
| CHINA PHARMA HOLDINGS, INC. |
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| CONSOLIDATED STATEMENTS OF CASH FLOWS |
||||
| For the Year |
||||
| Ended December 31, |
||||
| 2017 |
2016 |
|||
| Cash Flows from Operating Activities: |
||||
| Net loss |
$ (19,277,565) |
$ (9,182,624) |
||
| Depreciation and amortization |
3,291,330 |
3,078,074 |
||
| Inventory Write off |
118,003 |
|||
| Bad debt expense |
1,393,576 |
1,086,449 |
||
| Deferred income taxes |
122,631 |
308,175 |
||
| Impairment of intangible assets |
14,183,969 |
3,962,141 |
||
| Changes in assets and liabilities: |
||||
| Trade accounts and other receivables |
51,024 |
(1,097,556) |
||
| Advances to suppliers |
1,614,958 |
380,779 |
||
| Inventory |
1,718,336 |
2,734,612 |
||
| Trade accounts payable |
(2,045,948) |
815,198 |
||
| Accrued taxes payable |
18,753 |
72,107 |
||
| Other payables and accrued expenses |
420,523 |
377,663 |
||
| Advances from customers |
(274,068) |
265,928 |
||
| Prepaid expenses |
(494,306) |
94,762 |
||
| Net Cash Provided by Operating Activities |
841,216 |
2,895,708 |
||
| Cash Flows from Investing Activities: |
||||
| Purchases of property and equipment |
(136,479) |
(193,404) |
||
| Net Cash Used in Investing Activities |
(136,479) |
(193,404) |
||
| Cash Flows from Financing Activities: |
||||
| Payments of construction term loan |
(1,479,944) |
(1,505,346) |
||
| Payments of short term notes payable |
- |
(4,516,039) |
||
| Net Cash Provided by Financing Activity |
(1,479,944) |
(6,021,385) |
||
| Effect of Exchange Rate Changes on Cash |
139,619 |
(263,877) |
||
| Net (Decrease) Increase in Cash and Cash Equivalents |
(635,588) |
(3,582,958) |
||
| Cash and Cash Equivalents at Beginning of Period |
2,665,802 |
6,248,760 |
||
| Cash and Cash Equivalents at End of Period |
$ 2,030,214 |
$ 2,665,802 |
||
| Supplemental Cash Flow Information: |
||||
| Cash paid for income taxes |
$ - |
$ - |
||
| Cash paid for interest |
$ 525,788 |
$ 836,011 |
||
| Supplemental Noncash Investing and Financing Activities: |
||||
| Issuance of banker's acceptances |
$ 709,796 |
$ 1,088,879 |
||
| Accounts receivable collected with banker's acceptances |
531,294 |
935,265 |
||
| Inventory purchased with banker's acceptances |
492,906 |
935,265 |
||
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