NEW YORK, March 9 /PRNewswire-Asia-FirstCall/ -- American Oriental Bioengineering, Inc. , a pharmaceutical company dedicated to improving health through the development, manufacture and commercialization of a broad range of prescription and over the counter (“OTC”) products in China, today announced financial results for the fourth quarter and fiscal year ended December 31, 2008.
Financial Results
Revenue in the fourth quarter of 2008 increased 67.9% year over year to $96.3 million from $57.3 million, reflecting continued demand for the Company’s core prescription and OTC pharmaceutical products. Revenue from pharmaceutical products increased 69.9% to $81.2 million from $47.8 million in the prior year’s fourth quarter, driven by increased demand for the Jinji Series of products, Shuanghuanglian Injection Powder, and the Cease Enuresis Soft Gel and Patch. Prescription pharmaceutical products generated $28.5 million in revenue during the fourth quarter, up 39.8% year over year, and OTC pharmaceutical products generated $52.6 million in revenue during the fourth quarter, up 92.3% year over year. Nutraceutical products generated revenue of approximately $9.6 million in the fourth quarter of 2008, roughly flat compared to the prior year period. Revenue from nutraceutical products as a percentage of total revenue decreased to approximately 10.0% from approximately 16.6% in the fourth quarter of last year, as the Company continued to focus more on pharmaceutical product sales. The Company generated $5.5 million in distribution revenue since acquiring Nuo Hua on October 18, 2008.
Gross profit in the fourth quarter of 2008 increased 53.9% to $60.0 million from $39.0 million in the fourth quarter of 2007. Gross margin was 62.4%, compared with 68.1% in the prior year’s period, reflecting lower margin distribution and CCXA product revenue.
Operating income in the fourth quarter was $11.8 million compared with $18.8 million in the prior year period and primarily reflects a $12.3 million expense for in-process R&D at GuangXi HuiKe (“GHK”), which the Company acquired in the fourth quarter. In line with accounting policies at the time of the acquisition, the Company was required to expense, not capitalize, the estimated future value of GHK’s intangible assets. General and administration expenses as well as selling and marketing expenses increased 77% to $22.3 million from $12.6 million in the prior year period. The increase primarily reflects marketing and promotional initiatives related to Jinji and Boke products.
Net income for the fourth quarter of 2008 was $8.0 million, or $0.10 per diluted share. Non-GAAP net income, which excludes interest expense related to the Company’s outstanding convertible debt as well as the in-process R&D expense described above, increased 42.7% to $21.7 million, from $15.2 million in the prior year period. Non-GAAP net income per diluted share increased to $0.25 per diluted share in the fourth quarter of 2008, from $0.20 per diluted share in the prior year period. Please refer to the Company’s GAAP to Non-GAAP reconciliation table provided below.
Fiscal 2008 Financial Results
Revenue for the fiscal year 2008 increased 64.9% to $264.6 million from $160.5 million in 2007. Prescription pharmaceutical products generated revenue of $87.4 million, up 48.1% from $59.0 million in the year 2007, and OTC pharmaceutical products generated revenue of $137.5 million, up 99.8% from $68.8 million in 2007. The CCXA and Boke businesses contributed revenue of $24.8 million and $38.2 million, respectively, during the fiscal year 2008, compared with $5.4 million and $3.2 million in 2007. CCXA and Boke businesses began contributing to revenue in the third and fourth quarters of 2007. Revenue from nutraceutical products increased 4.9% to $34.3 million from $32.7 million in the year before. Revenue from Nuo Hua’s distribution business was $5.5 million and began contributing to results in the fourth quarter of 2008.
Net income in 2008 increased 10.4% to $47.8 million, or $0.61 per diluted share. Non-GAAP net income, as described above and reconciled below, was $62.7 million, compared with $43.3 million in the prior year. Non-GAAP net income per diluted share increased to $0.76 per diluted share from $0.61 per diluted share in the prior year.
Mr. Tony Liu, Chairman and Chief Executive Officer of American Oriental Bioengineering, commented, “In 2008, we strengthened our leading brands, enhanced our product portfolio, and diversified our operations in a way that lends flexibility to our business model, so that we can navigate China’s rapidly changing regulatory environment. We achieved these successes despite the increasingly challenging economic environment worldwide, and we are cautiously optimistic that China’s healthcare industry remains somewhat insulated from the global economic crisis. Going into 2009 and 2010, we’ll continue to strengthen our core competencies in production, sales and marketing and distribution reach, as well as focus on R&D efforts and our infrastructure, to ensure that we are well-prepared to capitalize on the many opportunities we see in China’s healthcare sector.”
Conference Call
The Company will hold a conference call at 8:00 am ET on March 9, 2009 to discuss fiscal fourth quarter and full year 2008 results. Listeners may access the call by dialing 1-866-203-2528 or 1-617-213-8847 for international callers, access code: 34183253. A webcast will also be available through AOB’s website at http://www.bioaobo.com . A replay of the call will be available through March 16, 2009. Listeners may access the replay by dialing 1-888-286-8010 or 1-617-801-6888 for international callers, access code: 73734657.
About American Oriental Bioengineering, Inc.
American Oriental Bioengineering, Inc. is a China-based pharmaceutical company dedicated to improving health through the development, manufacture and commercialization of a broad range of prescription and over the counter products.
Statements made in this press release are forward-looking and are made pursuant to the safe harbor provisions of the Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties that may cause actual results to differ materially from those set forth in these statements. The economic, competitive, governmental, technological and other factors identified in the Company’s filings with the Securities and Exchange Commission, including the Form 10-K for the year ended December 31, 2008, may cause actual results or events to differ materially from those described in the forward looking statements in this press release. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether because of new information, future events, or otherwise.
CONTACT: Ashley M. Ammon of Integrated Corporate Relations, Inc.,
+1-203-682-8208, for American Oriental Bioengineering, Inc.
Web site: http://www.bioaobo.com/
