NEW YORK, Aug. 11 /Xinhua-PRNewswire-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 quarter ended June 30, 2008.
Revenue in the second quarter of 2008 increased 74.0% year over year to $59.0 million from $33.9 million, reflecting a continued increase in demand for the Company’s OTC and prescription pharmaceutical products. Revenue from pharmaceutical products increased 91.5% to $49.8 million from $26.0 million in the second quarter of 2007. Revenue from OTC pharmaceutical products increased 102.9% to $29.4 million from $14.5 million in the prior year’s second quarter, reflecting continued recognition of the Company’s new products supported by effective marketing campaigns. Sales generated by CCXA and Boke, which were not subsidiaries in the second quarter of 2007, were major contributors to the increase in OTC sales and generated a combined $13.4 million of revenue during the second quarter of 2008. Strong sales of the Jinji series and Jinji Yimucao products also contributed to the increase in OTC revenue during the second quarter of 2008. Prescription pharmaceutical products generated $20.4 million in revenue during the second quarter of 2008, a 77.2% year over year increase, driven by sales of Shuanghuanglian Injection Powder and Cease Enuresis Soft Gel. We believe that our continous marketing efforts, increased brand recognition and effective pricing strategy, as well as expanding rural market coverage drove prescription pharmaceutical revenue performance during the second quarter of 2008. Nutraceutical product revenue increased approximately 17% to $9.2 million in the second quarter of 2008 from $7.9 million in the prior year’s period, and decreased as a percentage of total revenue to approximately 15.6% versus 23.3% in the comparable period. The increase in Nutraceutical revenue was mainly attributed to the increase in sales of peptide tablets and peptide powder. The Company continues to focus on selling and marketing higher growth pharmaceutical products.
Gross profit in the second quarter of 2008 increased 69.1% to $40.1 million from $23.7 million in the second quarter of 2007. Gross margin was approximately 67.9%, compared to 69.9% in the prior year’s period, reflecting a shift in product mix.
For the second quarter of 2008, operating expenses increased 75.5% to $21.4 million from $12.2 million in the comparable period of 2007. The increase in operating expenses was primarily due to increases of $3.8 million in sales and marketing expenses, $2.7 million in general and administrative expenses as well as additional depreciation and amortization costs due to the Boke and CCXA acquisitions. Income from operating in the second quarter of 2008 increased 62.4% to $18.7 million from $11.5 million in the second quarter of 2007, while operating margin was 31.7%, compared to 33.9% in the second quarter of the prior year.
Net income for the second quarter of 2008 increased 43.4% to $13.9 million, or $0.18 per diluted share, compared to $9.7 million, or $0.15 per diluted share, in the prior year’s period. Net income for the second quarter of 2008 includes the impact of $0.6 million in loss from unconsolidated entities, related to the Company’s minority ownership in China Aoxing. Diluted share count in the second quarter of 2008 was 78.2 million, compared to 66.6 million in the second quarter of 2007.
Mr. Tony Liu, Chairman and Chief Executive Officer of American Oriental Bioengineering, commented ''We are very pleased with our financial performance in the second quarter of 2008. All of our product categories exhibited strong sales and we believe that our performance is the result of promoting effective marketing and branding of our products and the expansion into rural markets. We believe that our six month performance speaks to the effectiveness of our acquisition strategy. For the six month period in 2008, OTC revenue was up 117% versus the year before, with $23.4 million of incremental revenue from CCXA and Boke integrations. We also generated $28.4 million of operating cash flow, an increase of 77.3% from the same period of last year.’'
Mr. Liu concluded, ''We continue to anticipate revenue growth in 2008 of at least 50 percent, and expect to reach total revenue of at least $245.0 million in the full year 2008. This anticipated year over year top line growth reflects continued demand for our leading products, and particularly our success with CCXA and Boke integrations. We also anticipate net income performance of at least $62.0 million, which reflects anticipated year over year net income growth of more than 44%. This full year financial guidance excludes interest expense related to the July 2008 convertible financing and excludes the financial impact of any pending acquisitions or LOIs. On that note, we remain dedicated to our goal of building a leading pharmaceutical business in China. Today we have signed an LOI and we are in the process of negotiating a large acquisition of a pharmaceutical distribution company located in China, which we believe will bolster the reach of our distribution network. We intend to move quickly and efficiently on the acquisition front and we’ll strive to work responsibly and aggressively on behalf of our shareholders.’'
The Company will hold a conference call at 5:00 pm ET on August 11, 2008 to discuss its fiscal second quarter 2008 results. Listeners may access the call by dialing 1-800-599-9816 or 1-617-847-8705 for international callers, access code: 41757592. A webcast will also be available through AOB’s website at http://www.bioaobo.com . A replay of the call will be available through August 18, 2008. Listeners may access the replay by dialing 1-888-286-8010 or 1-617-801-6888 for international callers, access code: 95123746.
About American Oriental Bioengineering Inc.
American Oriental Bioengineering Inc. is a pharmaceutical company dedicated to improving health through the development, manufacture and commercialization of a broad range of prescription and over the counter products in China.
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-Q for the quarter ended June 30, 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: Anindya Chatterjee, Chief Strategy Officer at +1-212-786-7566 or
Ashley M. Ammon of Integrated Corporate Relations at +1-203-682-8200
Web site: http://www.bioaobo.com/
