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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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