CHENGDU, China, May 15, 2012 /PRNewswire-Asia/ -- Tianyin Pharmaceutical Inc. (NYSE Amex: TPI), a pharmaceutical company that specializes in the patented biopharmaceutical, modernized traditional Chinese medicine (mTCM), branded generics and active pharmaceutical ingredients (API) announced financial results for the third quarter of fiscal year 2012.
Third Quarter Fiscal Year 2012 Ended March 31, 2012 Financial Highlights:
- 3Q FY2012 revenue delivered $14.4 million compared with $24.9 million in 3Q FY2011,
- Operating income delivered $1.3 million, compared with $5.0 million in 3Q FY2011,
- Net Income was $0.9 million compared with $4.1 million in 3Q FY2011,
- Earnings per share of $0.03 per basic share, or $0.03 per diluted share, compared with $0.14 per basic share, or $0.14 per diluted share in 3Q FY2011,
- Cash and cash equivalents totaled $29.9 million on March 31, 2012,
- Operating cash flow for the nine months ended March 31, 2012 was $4.8 million, compared with $12.2 million for the nine months ended March 31, 2011.
Comparison of results for the three months ended March 31, 2012 and 2011:
Three Months Ended March 31,
Cost of sales
Total operating expenses
Provision for income taxes
Less: Net (loss) attributable to noncontrolling interest
Foreign currency translation adjustment
* Net income and comprehensive net income includes a $0.35 million non-cash gain due to the change in the fair value of our warrants liability.
Sales for the quarter ended March 31, 2012 was $14.4 million, a decrease of 40.6% as compared to $24.9 million for the quarter ended March 31, 2011. The decrease was predominately due to 1) competitive industry with wide generic pricing pressure, 2) restrictive government policies to prioritize the Essential Drug List (EDL) drug sales that simultaneously reduce and negatively impact the sales and margins of our higher margined generic pharmaceuticals, 3) seasonality from the Chinese New Year, which negatively effected sales in the period, and 4) during the prior period, a rise in demand as a result of inventory accumulation by our sales channels prior to the enforcement of healthcare reform polices a year earlier.
For the remainder of fiscal 2012, we expect our generic portfolio and our TMT distributions to continue witness flat to slightly rising growth as a result of the current pricing restrictions from the healthcare reform policies.
Our Jiangchuan macrolide (JCM) facility has begun the ramp up of the production capacity after initial readjustment of the production efficiency during the third quarter of fiscal 2012. We project for the fourth quarter fiscal 2012, JCM facility to reach approximately 50% production capacity or 10 tons per month. We further expect that JCM facility to increase its capacity to 80% by the end of 2012 or close to 200 tons annual capacity.
Our top five product sales are: Gingko mihuan oral liquic (GMOL): $2.6 million; Apu Shuanxin benorylate granules (APU): $0.90 million; Azithromycin tablets (AZI): $0.52 million; Xuelian Chongcao oral liquid (XLCC): $0.65 million; and Qingre Jiedu oral liquid (QR): $0.40 million. These products totaled $5.1 million in sales, representing 35% of the quarterly revenue.
Cost of Sales for the quarter ended March 31, 2012 was $9.5 million or 66.5% of sales, as compared to $14.0 million or 56.4% of sales for the quarter ended March 31, 2011. The percentage increase in our cost of sales from the previous period was mainly due to: 1) generic pricing pressure, 2) an increase as a total percentage of sales from the TMT distribution business, which amounted to $3.2 million at 10% gross margin.
Gross Margin for the quarter ended March 31, 2012 was 33.5% as compared to 43.6% for the quarter ended March 31, 2011. Our organic product portfolio delivered 41.1% gross margins, or 10.3% lower than our 51.4% for the respective prior period. As a result of a mix of the lower margin distribution revenue and gross margin reduction under the current pricing environment, we expect that our overall gross margin in the near term, on a quarter to quarter comparison basis, may trend lower, but on a sequential basis may stabilize depending upon the revenue mix of our TMT revenue and JCM revenue as compared to the proprietary portfolio's revenue performance.
Operating Expenses were $3.5 million for the quarter ended March 31, 2012, as compared to $5.8 million for the quarter ended March 31, 2011. The decrease in operating expenses is mainly associated with the lower sales and marketing costs.
Net Income was $0.9 million for the quarter ended March 31, 2012, as compared to net income of $4.1 million which includes $0.35 million non-cash gain due to the gain in fair value of warrants liability for the quarter ended March 31, 2011, a decrease of $3.1 million. Net profit margins for the three months ended March 31, 2012 decreased to 6.2% from 14.9% for the three months ended March 31, 2011. This is a result of the sales decrease along with the gross margin compression during the quarter.
Diluted earnings per share for the quarter ended March 31, 2012 were $0.03 based on 29.2 million shares compared with the earnings of $0.14 per diluted share for the quarter ended March 31, 2011, based on 29.8 million shares.
Balance Sheet and Cash Flow
As of March 31, 2012, we had cash and cash equivalents of $29.9 million. Net cash generated from operating activities was $4.8 million for the nine months ended March 31, 2012, compared with $12.2 million operating cash flow for the nine months ended March 31, 2011. The Days Sale Outstanding (DSO) for the quarter was 24.5 days improving from 38.7 days for the quarter ended March 31, 2011. We believe that TPI is adequately funded to meet all of the working capital and capital expenditure needs for fiscal 2012.
Business Development & Outlook
R&D for additional indications of flagship product Gingko Mihuan (GMOL)