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Bohai Pharmaceuticals Group, Inc. Third Quarter Income Up 24% To $3.9 Million



5/16/2014 9:44:07 AM

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BEIJING, CHINA--(Marketwired - May 15, 2014) -

Bohai Pharmaceuticals Group, Inc. (OTC Pink: BOPH) (PINKSHEETS: BOPH), a leading manufacturer and marketer of traditional Chinese medicine (TCM), today announced that for the third fiscal quarter of 2014 ended March 31, the company had net revenues of $39,722,126, a 14 percent improvement on net revenues of $34,786,624 in the third fiscal quarter of 2013. The company had net income in Q3 2014 of $3,928,011, or $.22 per basic common share and $.19 per diluted common share, a 24 percent improvement on net income of $3,159,206, or $.18 per basic common share and $.15 per diluted common share, in the comparable year-ago quarter.

For the first nine months of the current fiscal year, Bohai had net revenues of $129,284,445, a 16 percent gain on net revenues of $111,067,950 for the same period in fiscal 2013. Bohai's net income in the first nine months of fiscal 2014 was $18,024,773, or $1.01 per basic common share and $.85 per diluted common share, a 22 percent gain on net income of $14,813,455, or $.83 per basic common share and $.71 per diluted common share, in the same period last year.

The increase in Bohai's third fiscal quarter net revenues compared to the same period a year ago was primarily due to an 11 percent increase in revenues contributed by the company's three leading TCM products: Lung Nourishing Syrup, and Tongbi Capsules and Tongbi Tablets for treatment of arthritis, which together accounted for over 96 percent of the company's net revenues in both the current fiscal year quarter and first nine-month period. The increase in the company's net income was attributable mostly to an increase in total gross profit of $3,729,763, offset by an increase in operating expenses of $2,609,346 for this year compared to the same period a year ago.

Bohai's improvement in fiscal 2014 nine-month net revenues was due primarily to a net increase in revenues of 18 percent from the above three products. The increase in the company's net income during the first nine months of fiscal 2014 compared to the same period a year ago was attributable mostly to an increase in total gross profit of $14,435,545, offset by an increase in operating expenses of $8,495,777.

Bohai CEO, Mr. Hongwei Qu, said he believed the company's operating performance would continue to show improvement in future quarters. First, he said, the company has two products -- Lung Nourishing Syrup and Fangfeng Tongsheng Granule (for treatment of a wide range of dermatologic conditions) -- on China's Essential Drug List (EDL), giving Bohai exclusive or near-exclusive rights to manufacture and distribute these two medicines, both of which are eligible for up to 100 percent insurance reimbursement by the Chinese government. In addition, the company's Tongbi Capsules has been included on the EDL for Shangdong and Hubei provinces, providing the company with further marketing advantages. Plus, said the CEO, all rural hospitals and clinics as well as all level 2 hospitals in China have been mandated to limit their prescriptions to EDL-listed products.

Looking forward, said Mr. Qu, the company is positioned to expand its total revenue from Tongbi Capsules and Tongbi Tablets from $65 million in 2013 to $85 million within the next three to five years.

The company's Fangfeng Tongsheng Granule should also enjoy rapid growth, he added, supported by both its EDL status as well as the current 17 percent annual growth in China's overall dermatology drug market.

Lastly, he said, due to the worsening air pollution conditions afflicting much of China, the company's Lung Nourishing Syrup is expected to increase its annual revenue from $28 million in 2013 to $90 million within three to five years.

About Bohai Pharmaceuticals Group

A manufacturer and marketer of traditional Chinese medicine (TCM) in the People's Republic of China, Bohai offers seven varieties of approved herbal medicines comprising four prescription drugs and three over-the-counter products in six delivery systems. The company reported net income of $19.1 million on revenue of $151.8 million for the year ended June 30, 2013, and net income of $18.0 million on revenue of $129.3 million for the first nine months of fiscal 2014.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of United States securities laws. You should not rely upon forward-looking statements as predictions of future events. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this release to conform these statements to actual results or to changes in our expectations. You should review the factors described in the section entitled "Risk Factors" in our prospectus filed with the SEC and other documents we file from time to time with the SEC. We qualify all of our forward-looking statements by these cautionary statements.

BOHAI PHARMACEUTICALS GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) For the Three Months For the Nine Months Ended Ended March 31, March 31, ------------------------- --------------------------- 2014 2013 2014 2013 ------------ ------------ ------------- ------------- Net revenues $ 39,722,126 $ 34,786,624 $ 129,284,445 $ 111,067,950 Cost of revenues 10,125,405 8,919,666 30,879,154 27,098,204 ------------ ------------ ------------- ------------- Gross profit 29,596,721 25,866,958 98,405,291 83,969,746 ------------ ------------ ------------- ------------- Operating expenses: Selling, general and administrative expenses 23,103,935 20,476,092 70,348,334 60,230,015 Impairment Charge - drug formula 0 0 0 1,688,486 Depreciation and amortization 722,006 740,503 2,154,368 2,088,424 ------------ ------------ ------------- ------------- Total Operating expenses 23,825,941 21,216,595 72,502,702 64,006,925 ------------ ------------ ------------- ------------- Income from operations 5,770,780 4,650,363 25,902,589 19,962,821 ------------ ------------ ------------- ------------- Other income (expenses): Interest income 3,296 2,796 78,016 29,122 Interest expenses (336,645) (456,930) (1,555,573) (1,396,286) Other (expenses) income, net (29) (142) (31,329) (16,733) Change in fair value of derivative liabilities 0 0 0 1,211,236 ------------ ------------ ------------- ------------- Total other (expenses) income (333,378) (454,276) (1,508,886) (172,661) ------------ ------------ ------------- ------------- Income before provision for income taxes 5,437,402 4,196,087 24,393,703 19,790,160 Provision for income taxes (1,509,391) (1,036,881) (6,368,930) (4,976,705) ------------ ------------ ------------- ------------- Net income $ 3,928,011 $ 3,159,206 $ 18,024,773 $ 14,813,455 ============ ============ ============= ============= Comprehensive income: Net income $ 3,928,011 $ 3,159,206 $ 18,024,773 $ 14,813,455 Unrealized foreign currency translation (loss) gain (1,187,686) 658,168 77,850 862,251 ------------ ------------ ------------- ------------- Comprehensive income $ 2,740,325 $ 3,817,374 $ 18,102,623 $ 15,675,706 ============ ============ ============= ============= Net income per common share Basic $ 0.22 $ 0.18 $ 1.01 $ 0.83 ============ ============ ============= ============= Diluted $ 0.19 $ 0.15 $ 0.85 $ 0.71 ============ ============ ============= ============= Weighted average common shares outstanding Basic 17,861,085 17,861,085 17,861,085 17,861,085 ============ ============ ============= ============= Diluted 21,831,328 22,093,335 21,957,639 22,093,335 ============ ============ ============= ============= BOHAI PHARMACEUTICALS GROUP, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS March 31, June 30, 2014 2013 (UNAUDITED) ASSETS Current assets: Cash $ 11,265,031 $ 6,947,972 Restricted cash 12,609,747 12,574,051 Accounts receivable 46,496,963 38,716,023 Inventories 4,504,744 2,781,734 Prepaid expenses and other current assets 939,555 1,007,365 ------------- ------------- Total current assets 75,816,040 62,027,145 ------------- ------------- Non-current assets: Property, plant and equipment, net 17,327,863 17,678,453 Prepayment for property, plant and equipment 996,286 604,739 Intangible assets - pharmaceutical formulas 14,149,231 14,109,169 Intangible assets - land use right, net 37,350,012 37,863,464 Other intangible assets, net 24,851,359 28,139,219 Goodwill 5,216,982 5,202,209 ------------- ------------- Total non-current assets 99,891,733 103,597,253 ------------- ------------- TOTAL ASSETS $ 175,707,773 $ 165,624,398 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Notes payable $ 9,735,203 $ 9,707,638 Short-term loan 4,867,601 0 Accounts payable 5,137,420 5,081,913 Accrued expenses 11,805,864 12,185,615 Land use right payable 0 6,471,759 Income taxes payable 2,073,289 2,222,476 Due to a related party 55,741 52,830 ------------- ------------- Total current liabilities 33,675,118 35,722,231 ------------- ------------- Non-current liabilities: Acquisition purchase price payable - non- current portion 0 5,000,000 Deferred tax liability 7,922,428 8,048,113 Convertible notes, net 7,618,050 8,464,500 ------------- ------------- Total non-current liabilities 15,540,478 21,512,613 ------------- ------------- TOTAL LIABILITIES 49,215,596 57,234,844 ------------- ------------- COMMITMENTS, CONTINGENCIES, AND OTHER MATTERS STOCKHOLDERS' EQUITY Common stock, $0.001 par value, 150,000,000 shares authorized, 17,861,085 shares issued and outstanding as of March 31, 2014 and June 30, 2013, respectively 17,861 17,861 Additional paid-in capital 24,615,353 24,615,353 Accumulated other comprehensive income 9,077,431 8,999,581 Retained earnings 92,781,532 74,756,759 ------------- ------------- Total stockholders' equity 126,492,177 108,389,554 ------------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 175,707,773 $ 165,624,398 ============= =============


Contacts:

Investors
Jimmy Caplan
Asia IR/PR
512-329-9505
jimmy@asia-irpr.com

Media
Rick Eisenberg
Asia IR/PR
212-496-6828
rick@asia-irpr.com



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