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China Pharma Holdings, Inc. Reports Third Quarter 2018 Financial Results

2018-11-15 19:00 963

HAIKOU CITY, China, Nov. 15, 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,  announced today its financial results for the quarter ended September 30, 2018.

Third Quarter Highlights

  • Revenue was $2.3 million for the three months ended September 30, 2018, which represented a decrease of  27.3% compared to $3.2 million for the three months ended September 30, 2017;
  • Gross profit was $0.5 million and $0.4 million for the three months ended September 30, 2018 and 2017, respectively. Our gross profit margin in the third quarter of 2018 was 22.3%, compared to 13.3% in the same period 2017;
  • Loss from operations was $1.9 million in the third quarter of 2018, compared to $2.1 million in the same period of 2017;
  • Net loss was $1.9 million in the third quarter of 2018, compared to $2.2 million in the same period of 2017.  Loss per common share was $(0.04) per basic and diluted share in the third quarter of 2018, compared to $(0.05) per basic and diluted share in the same period of 2017.

In a statement from Ms. Zhilin Li, China Pharma's Chairman and CEO, "It is the Company's top priority to actively and steadily increase sales. We experienced certain market fluctuations in the third quarter of 2018, but through the continued implementation of sales promotions, our sales revenue in the first nine months of 2018 was comparable to the same period a year ago. Management will continue to vigorously promote sales through active participation in recent provincial market openings to receive new drug tender offers and through further penetration into the market." Ms. Li continued, "The ongoing generic drug consistency evaluations and reform of China's drug production registration and review policies will continue to have a significant impact on the current performance and future development of Chinese pharmaceutical manufacturers, including us, and may gradually change business patterns of the industry. 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."

Third Quarter Results

Revenue was $2.3 million for the three months ended September 30, 2018, compared to $3.2 million for the three months ended September 30, 2017. This decrease was mainly due to market volatility.

Gross profit was $0.5 million and $0.4 million for the three months ended September 30, 2018 and 2017, respectively. Our gross profit margin in the third quarter of 2018 was 22.3%, compared to 13.3% in the same period 2017.

Our selling expenses for the three months ended September 30, 2018 were $0.9 million, which accounted for 40.3% of the total revenue in the third quarter of 2018.  For the same period in 2017, our selling expenses were $0.7 million, which accounted for 21.7% of the total revenue in the third quarter of 2017. When comparing selling expenses in 2018 to those in 2017, the increase in the percentage of selling expenses to total revenue was mainly due to the decrease in revenue in this quarter, along with many adjustments in our selling processes under healthcare reform policies. Despite the decrease in sales, we still need to maintain personnel and continue our sales activities to support the sales and collection of accounts receivable.

Our general and administrative expenses for the three months ended September 30, 2018 and September 30, 2017, were both $0.3 million. General and administrative expenses accounted for 14.2% and 11.0% of our total revenues in the third quarters of 2018 and 2017, respectively.

Net loss for the three months ended September 30, 2018 was $1.9 million, compared to $2.2 million for the three months ended September 30, 2017. The change in the net result was mainly due to the decrease in revenue, and the increase in selling expenses being offset by a decrease in impairment of long term assets in the third quarter of 2018, as compared to the same period of 2017.

Nine Months Results

Revenue decreased by 3.0% to $9.1 million for the nine months ended September 30, 2018, as compared to $9.4 million for the nine months ended September 30, 2017.

Gross profit for the nine months ended September 30, 2018 was $2.1 million, compared to $1.8 million in the same period of 2017. Gross profit margins for the nine months ended September 30, 2018 and 2017 were 24% and 19%, respectively.  The increase was mainly due to the increase in sales of higher margin products in the nine months ended September 30, 2018.

Our net losses for the nine months ended September 30, 2018 and 2017 were $3.2 million and $5.5 million, respectively, which represented an improvement of $2.3 million for the period in 2018.

Financial Condition

As of September 30, 2018, the Company had cash and cash equivalents of $0.7 million, compared to $2.0 million as of December 31, 2017.

Our accounts receivable balance was $0.8 million as of September 30, 2018, compared to $2.3 million as of December 31, 2017.

Conference Call

The Company will hold a conference call at 8:30am E.T. on November 15, 2018, to discuss the financial results of the third quarter 2018. Listeners may access the call by dialing 1-866-519-4004 for domestic callers or 65-671-350-90 for international callers, Conference ID # 4389333. A recording of the call will be accessible through November 23, 2018 by dialing 1-855-452-5696 or 61-281-990-299 for international callers, Conference ID #4389333.

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  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. Such risks and uncertainties may include, but are not limited to: 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.

CONDENSED CONSOLIDATED BALANCE SHEETS









September 30,


December 31,



2018


2017

ASSETS


 (Unaudited) 


 (Audited) 

Current Assets:





Cash and cash equivalents


$         667,629


$      2,030,214

Restricted cash


1,476,344


709,796

Banker's acceptances


-


39,867

Trade accounts receivable, less allowance for doubtful





accounts of $18,658,490 and $18,209,734, respectively


793,779


2,293,120

Other receivables, less allowance for doubtful





accounts of $39,323 and $40,010, respectively


177,314


162,981

Advances to suppliers


332,698


461,307

Inventory


6,099,999


6,407,155

Prepaid expenses


162,628


185,647

Total Current Assets


9,710,391


12,290,087






Advances for purchases of intangible assets


22,478,660


23,722,954

Property, plant and equipment, net


20,056,635


23,541,003

Intangible assets, net


289,054


398,856

TOTAL ASSETS


$    52,534,740


$    59,952,900






LIABILITIES AND STOCKHOLDERS' EQUITY





Current Liabilities:





Trade accounts payable


$         588,717


$      1,141,138

Accrued expenses


182,692


276,368

Other payables


3,347,444


2,858,701

Advances from customers


632,852


581,132

Other payables - related parties


1,354,567


1,354,567

Current portion of construction loan facility


2,184,508


2,305,430

Bankers' acceptance notes payable


1,476,344


709,796

Total Current Liabilities


9,767,124


9,227,132

Non-current Liabilities:





Construction loan facility


4,369,016


6,916,291

Deferred tax liability


765,477


738,175

Total Liabilities


14,901,617


16,881,598

Commitments and Contingencies (Note 12)





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


2,321,761


5,479,809

Accumulated other comprehensive income


11,677,578


13,957,709

Total Stockholders' Equity


37,633,123


43,071,302

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$    52,534,740


$    59,952,900

 

CHINA PHARMA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)












For the Three Months


For the Nine Months



Ended September 30,


Ended September 30,



2018


2017


2018


2017

Revenue


$      2,298,472


$       3,162,222


$      9,087,867


$      9,364,605

Cost of revenue


1,785,927


2,740,683


6,942,141


7,576,856










Gross profit


512,545


421,539


2,145,726


1,787,749










Operating expenses:


22.3


13.3


23.6


19.1

Selling expenses


925,654


686,825


2,320,204


2,207,896

General and administrative expenses


327,161


348,963


1,172,314


1,377,640

Research and development expenses


62,059


27,543


107,946


75,053

Bad debt expense


1,129,105


229,466


1,481,786


954,518

Impairment of long term assets


-


1,184,103


-


2,162,083

Total operating expenses


2,443,979


2,476,900


5,082,250


6,777,190










Loss from operations


(1,931,434)


(2,055,361)


(2,936,524)


(4,989,441)










Other income (expense):









Interest income


16,113


21,947


27,931


43,296

Interest expense


(101,683)


(130,816)


(361,365)


(411,985)

Net other expense


(85,570)


(108,869)


(333,434)


(368,689)










Loss before income taxes


(2,017,004)


(2,164,230)


(3,269,958)


(5,358,130)

Income tax benefit (expense)


160,485


(31,198)


111,910


(92,106)

Net loss


(1,856,519)


(2,195,428)


(3,158,048)


(5,450,236)

Other comprehensive income - foreign currency









translation adjustment


(1,535,424)


2,083,398


(2,280,131)


3,571,880

Comprehensive income (loss)


$        (3,391,943)


$           (112,030)


$        (5,438,179)


$      (1,878,356)

Loss per share:









Basic and diluted


$                (0.04)


$                (0.05)


$                (0.07)


$               (0.13)

Weighted average shares outstanding


43,579,557


43,579,557


43,579,557


43,579,557

 

CHINA PHARMA HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)



For the Nine Months



Ended September 30,



2018


2017

Cash Flows from Operating Activities:





Net loss


$     (3,158,048)


$     (5,450,236)

Depreciation and amortization


2,499,114


2,447,866

Bad debt expense


1,481,786


954,518

Deferred income taxes


69,614


92,106

Impairment of long term assets


-


2,162,083

Changes in assets and liabilities:





Trade accounts and other receivables


(514,428)


21,325

Advances to suppliers


106,981


(251,306)

Inventory


471,995


1,237,573

Trade accounts payable


(516,263)


(1,303,944)

Accrued taxes payable


(114,432)


1,719

Other payables and accrued expenses


580,689


188,557

Advances from customers


86,675


(265,092)

Prepaid expenses


14,005


69,284

Net Cash Provided by (Used In) Operating Activities


1,007,688


(95,547)






Cash Flows from Investing Activities:





Purchases of property and equipment


(33,332)


(67,324)

Net Cash Used in Investing Activities


(33,332)


(67,324)






Cash Flows from Financing Activity:





Payments of construction term loan


(2,303,410)


(1,469,349)

Net Cash Used in Financing Activity


(2,303,410)


(1,469,349)






Effect of Exchange Rate Changes on Cash


(33,531)


90,857

Net (Decrease) Increase in Cash and Cash Equivalents


(1,362,585)


(1,541,363)

Cash and Cash Equivalents at Beginning of Period


2,030,214


2,665,802

Cash and Cash Equivalents at End of Period


$          667,629


$        1,124,439






Supplemental Cash Flow Information:





Cash paid for income taxes


$                       -


$                       -

Cash paid for interest


$           351,206


$           410,509






Supplemental Noncash Investing and Financing Activities:





Issuance of banker's acceptances


$          847,527


$          126,652

Accounts receivable collected with banker's acceptances


462,642


366,889

Inventory purchased with banker's acceptances


502,473


344,848

Cision View original content:http://www.prnewswire.com/news-releases/china-pharma-holdings-inc-reports-third-quarter-2018-financial-results-300750831.html

Source: China Pharma Holdings, Inc.
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