omniture

Updates - China Pharma Holdings, Inc. Reports Fiscal Year 2019 Financial Results

2020-04-15 04:30 15546

HAIKOU CITY, China, April 15, 2020 /PRNewswire/ -- China Pharma Holdings, Inc. (NYSE American: CPHI)  ("China Pharma," the "Company" or "We"), an NYSE American-listed corporation with a fully-integrated specialty pharmaceuticals subsidiary based in China, today announced that it is re-issuing its previous release that was made on March 31, 2020 to incorporate certain disclosures that are required under the NYSE American Company Guide Sections 401(h) and 610(b). Included below are these additional disclosures along with the previously disclosed financial results for the fiscal year ended December 31, 2019.

Full Year Highlights

  • Revenue decreased 11.4% to $11.0 million in fiscal year 2019 from $12.3 million in fiscal year 2018;
  • Gross margin was 13.6% in fiscal year 2019, compared to 16.0% in fiscal year 2018.
  • Impairment loss was $17.0 million in fiscal year 2019 compared to $6.5 million in fiscal year 2018, which represented an increase of $10.5 million;
  • Loss from operations was $20.4 million in fiscal year 2019 compared to $10.4 million in fiscal year 2018, which represented an increase of $10.0 million;
  • Net loss was $20.7 million in fiscal year 2019 compared to $10.8 million in fiscal year 2018. Loss per common share was $0.48 per basic and diluted share in fiscal year 2019 compared with $0.25 per basic and diluted share in fiscal year 2018.

Ms. Zhilin Li, China Pharma's Chairman and CEO, commented, "In 2019, we were continuously influenced by the policies and market environment of the pharmaceutical industry in China.  In particular, the various cost control related policies in connection with the healthcare insurance, Group Purchasing Organization ("GPO", a new drug purchasing practice in which the anticipated purchase volume will be announced in the tender announcement, and the suppliers will need to consider their manufacturing capacity in addition to the price) activities, consistency evaluation, and control of the percentage of drug expenditure among the total hospital expenditure. After evaluating the detailed rules of those major policies and considering the potential return of investment and our recent cash flow position, we have made the decision to impair all advances for our remaining four pipeline products in 2019. However, we may resume the development of these formulas in the future if sufficient funding and other favorable conditions arise." Ms. Li continued, "Nevertheless, we continue to explore in the field of comprehensive healthcare. Comprehensive healthcare focuses on people's daily life, aging and disease and pays attention to all kinds of risk factors and misunderstandings affecting health. We launched a wash-free sanitizer in early 2020 to address the market needs caused by COVID-19 in China. We aim to leverage our expertise in the PRC for the development, manufacture and commercialization of pharmaceutical and comprehensive healthcare products for the benefit of human health."

Full Year Results

Revenue decreased by 11.4% to $11.0 million for the year ended December 31, 2019, as compared to $12.3 million for the year ended December 31, 2018. This decrease in sales revenue was mainly due to the increased standards of drug tender procurement of GPO (drugs have to pass the consistency evaluation in order to participate in the GPO), and the decreased "drug ratio"(the ratio of drug expenditure to patients' total hospital expenditure) from 60% a few years ago to approximately 30% in 2019, which were promoted by the healthcare insurance cost control policy.

Gross profit for the year ended December 31, 2019 was $1.5 million, compared to $2.0 million in 2018. Our gross profit margin in 2019 was 13.6% compared to 16.0% in 2018. This decline in our gross profit margin was mainly due to a decrease in our sales but our fixed costs remained the same.

Our selling expenses for the year ended December 31, 2019 were $2.4 million, a decrease of $0.9 million compared to $3.2 million for the year ended December 31, 2018. Selling expenses accounted for 21.5% of the total revenue in 2019 compared to 26.1% in 2018.

Our general and administrative expenses for the year ended December 31, 2019 were $2.3 million, as compared to $1.9 million in 2018. General and administrative expenses accounted for 21.0% and 15.8% of our total revenues in 2019 and 2018, respectively.

Our bad debt expenses for the year ended December 31, 2019 was $0.003 million, which represented a decrease of $0.601 million compared to $0.604 million in 2018. The decrease in our bad debt expenses was mainly due to the Company's adjustment of its credit policies to customers and the request of more advanced payment from customers prior to the shipping of products for the year ended December 31, 2019 compared to December 31, 2018.

We recognized $17.02 million impairment loss for the year ended December 31, 2019, compared to $6.48 million in 2018, among which, there was an impairment loss for the advances made to laboratories for the years ended December 31, 2019 and 2018 in the amount of $17,015,117 and $6,134,271, respectively.  As a pharmaceutical company, we have been focusing on the development and maintenance of our intangible assets, mainly in the form of medical formulas. The consistency evaluation is expected to have a significant impact on all generic products not only in our pipeline, but also throughout the existing Chinese market. After evaluating the detailed rules under this policy and considering the return of investment and our recent cash flow position, our management made certain assessments regarding the impairment of our intangible assets, and identified four and two formulas that were unlikely to generate positive cash flow in the foreseeable future and therefore recognized impairment loss on them accordingly as of December 31, 2019 and December 31, 2018, respectively. The management determined to impair all advances at December 31, 2019, but may resume the development of these formulas in the future if sufficient funding and other favorable conditions arise.

Net loss for year ended December 31, 2019 was $20.7 million, or $0.48 each basic and diluted share, compared to net loss of $10.8 million, or net loss of $0.25 each basic and diluted share, for the year ended December 31, 2018. The increase in net loss was mainly a result of the decrease in impairment of long term assets.

Financial Condition

As of December 31, 2019 the Company had cash and cash equivalents of $1.1 million compared to $1.2 million as of December 31, 2018. Consider using "Working capital deficit increased to $4.5 million as of December 31, 2019 from $1.3 million as of December 31, 2018.

As of December 31, 2019, our net accounts receivable was $0.6 million, compared to $0.9 million as of December 31, 2018.

For the year ended December 31, 2019, cash flow from operating activities was $0.6 million, as compared to $1.9 million in 2018.

Receipt of Audit Opinion with Going Concern Explanatory Paragraph

The audit opinion provided by the Company's independent registered public accounting firm relating to the Company's audited consolidated financial statements (the "financial statements") for the year ended December 31, 2019 included a going concern explanatory paragraph. The financial statements were included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, which was filed with the Securities and Exchange Commission on March 30, 2020. The explanatory paragraph in the opinion of the Company's independent registered public accounting firm notes that as discussed in Note 1 to the financial statements, the Company incurred recurring losses from operations, has net current liabilities and an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1 to the financial statements and the financial statements do not include any adjustments that might result from the outcome of this uncertainty.

About China Pharma Holdings, Inc.

China Pharma Holdings, Inc. is a specialty pharmaceutical company that develops, manufactures and markets a diversified portfolio of products, focusing on conditions with high incidence and high mortality rates in China, including cardiovascular, CNS, infectious, and digestive diseases. The Company's cost-effective 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.

 

- FINANCIAL TABLES FOLLOW –

 

 

CHINA PHARMA HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS









December 31,


December 31,



2019


2018

ASSETS





Current Assets:





Cash and cash equivalents


$      1,074,979


$      1,186,587

Restricted cash


109,908


1,273,940

Banker's acceptances


45,756


20,579

Trade accounts receivable, less allowance for doubtful





accounts of $17,575,100 and $17,815,075, respectively


635,371


916,931

Other receivables, less allowance for doubtful





accounts of $22,729 and $34,884, respectively


46,643


170,098

Advances to suppliers


404


47

Inventory


3,588,824


5,054,975

Prepaid expenses


77,120


123,759

Total Current Assets


5,579,005


8,746,916






Advances for purchases of intangible assets


-


17,069,587

Property, plant and equipment, net


16,313,827


19,294,379

Operating lease right of use asset


136,779


-

Intangible assets, net


205,611


266,443

TOTAL ASSETS


$    22,235,222


$    45,377,325






LIABILITIES AND STOCKHOLDERS' EQUITY





Current Liabilities:





Trade accounts payable


$      1,366,330


$      1,060,934

Accrued expenses


189,880


310,804

Other payables


3,560,332


3,065,508

Advances from customers


505,398


525,647

Other payables - related parties


2,071,986


1,633,263

Operating lease liability, current portion


91,306


-

Current portion of construction loan facility


2,150,168


2,181,360

Bankers' acceptance notes payable


109,908


1,273,940

Total Current Liabilities


10,045,308


10,051,456

Non-current Liabilities:





Construction loan facility


2,150,168


4,362,720

Operating lease liability, net of current portion


48,701


-

Deferred tax liability


753,444


764,374

Total Liabilities


12,997,621


15,178,550

Commitments and Contingencies (Note 9)





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 (deficit) earnings


(25,972,402)


(5,270,358)

Accumulated other comprehensive income


11,576,219


11,835,349

Total Stockholders' Equity


9,237,601


30,198,775

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$    22,235,222


$    45,377,325








-


-

 

 

 

CHINA PHARMA HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)











For the Years




Ended December 31,




2019


2018

Revenue



$       10,923,936


$       12,330,687

Cost of revenue



9,441,752


10,355,839







Gross profit



1,482,184


1,974,848







Operating expenses:






Selling expenses



2,352,610


3,216,512

General and administrative expenses



2,289,520


1,949,921

Research and development expenses



229,637


172,384

Bad debt expense



3,153


604,388

Impairment loss



17,015,117


6,479,057

Total operating expenses



21,890,037


12,422,262







Loss from operations



(20,407,853)


(10,447,414)







Other income (expense):






Interest income



27,527


38,516

Interest expense



(321,718)


(451,258)

Net other expense



(294,191)


(412,742)







Loss before income taxes



(20,702,044)


(10,860,156)

Income tax benefit



-


109,989

Net loss



(20,702,044)


(10,750,167)

Other comprehensive income - foreign currency






translation adjustment



(259,130)


(2,122,360)

Comprehensive income (loss)



$      (20,961,174)


$      (12,872,527)

Loss per share:






Basic and diluted



$                 (0.48)


$                 (0.25)

Weighted average shares outstanding



43,579,557


43,579,557







 

 

 

CHINA PHARMA HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS




For the Years



Ended December 31,



2019


2018

Cash Flows from Operating Activities:





Net loss


$   (20,702,044)


$   (10,750,167)

Depreciation and amortization


2,928,799


3,258,739

Inventory write off


253,465


954,311

Bad debt expense


3,153


604,388

Deferred income taxes


-


68,419

Impairment loss


17,015,117


6,479,057

Changes in assets and liabilities:





Trade accounts and other receivables


(478,918)


99,400

Advances to suppliers


(361)


(449,101)

Inventory


1,999,978


688,852

Trade accounts payable


324,180


(16,441)

Accrued taxes payable


12,971


(147,099)

Other payables and accrued expenses


378,200


437,901

Change in bankers' acceptance notes payable


(1,158,728)


625,128

Advances from customers


(12,875)


(25,127)

Prepaid expenses


45,375


53,860

Net Cash Provided by Operating Activities


608,312


1,882,120






Cash Flows from Investing Activities:





Purchases of property and equipment


(136,003)


(51,145)

Net Cash Used in Investing Activities


(136,003)


(51,145)






Cash Flows from Financing Activities:





Payments of construction term loan


(2,174,399)


(2,263,877)

Advances from related party


691,459


287,423

Repayments to related party


(245,830)


-

Net Cash Used in Financing Activities


(1,728,770)


(1,976,454)






Effect of Exchange Rate Changes on Cash


(19,179)


(134,004)

Net Decrease in Cash, Cash Equivalents and Restricted Cash


(1,275,640)


(279,483)

Cash and Cash Equivalents at Beginning of Period


2,460,527


2,740,010

Cash, Cash Equivalents and Restricted Cash at End of Period


$       1,184,887


$       2,460,527






Cash and Cash Equivalents


1,074,979


1,186,587

Restricted cash


109,908


1,273,940

Cash, Cash Equivalents and Restricted Cash at End of Period


1,184,887


2,460,527






Supplemental Cash Flow Information:





Cash paid for income taxes


$                    -


$                    -

Cash paid for interest


$          299,164


$          588,191






Supplemental Noncash Investing and Financing Activities:





Accounts receivable collected with banker's acceptances


869,625


579,896

Inventory purchased with banker's acceptances


843,867


597,686

Right-of-use assets obtained in exchange for operating lease obligations


229,644


-



-



 

Cision View original content:http://www.prnewswire.com/news-releases/updates---china-pharma-holdings-inc-reports-fiscal-year-2019-financial-results-301039882.html

Source: China Pharma Holdings, Inc.
Related Stocks:
AMEX:CPHI
collection