Sinovac Reports Unaudited First Half of 2017 Financial Results

 

 
[01-December-2017]
 
 

BEIJING, Dec. 1, 2017 /PRNewswire/ -- Sinovac Biotech Ltd., a leading provider of biopharmaceutical products in China, announced today that it reported its unaudited financial results for the six months ended June 30, 2017.

Financial Highlights

  • Sales revenue for the first six months of 2017 was $66.9 million compared to $12.3 million in the prior year period, an increase of 442.6%. Sales increased primarily due to revenue generated by the Company's EV71 vaccine and a low comparison base in the second quarter of 2016 due to the Shandong vaccine scandal that negatively impacted the whole industry.
  • Net income attributable to common shareholders was $10.9 million, or $0.19 per basic and diluted share, compared to net loss attributable to common shareholders of $8.3 million, or $(0.14) per basic and diluted share, in the prior year period.

Business Highlights

Research and Development

Varicella - Sinovac obtained clinical research approval for its proprietary varicella vaccine candidate from the CFDAin September2015 and completed clinical trials in 2017. The production license application was submitted to the CFDA in November 2017.

EV71 - In November 2017, Sinovac obtained clinical trial approval to conduct a trial on healthy children aged from three to five years old. This vaccine was initially approved in January 2016 to target healthy children aged from six months to three years old. The Company made an application to conduct clinical study in an expanded population in April 2017.

Mr. Weidong Yin, Chairman, President and CEO of the Sinovac, commented, "In the first half of 2017, we experienced a year-over-year revenue growth of 442.6%. The revenue increase was mainly driven by the sales of EV71 vaccine that we commercialized in 2016. After the Shandong incident, sales activities resumed after a new policy on vaccine distribution and logistics was implemented at the beginning of 2017.This resulted inhigher first half sales of our regular vaccines, including Healive, Bilive, Anflu and mumps, than those of first half of 2016.

From the beginning of this year, we also had a few developments of our R&D programs. We filed production license application of our PPV-23, completed phase II trial of our Sabin-IPV, and completed phase III clinical trial of our varicella vaccine. We also filed an application of production license with CFDA for our varicella vaccine recently. We believe the pipeline products developments bring future growth potential. Sinovac will keep executing our strategy to develop and provide vaccines to address the unmet medical needs."

Unaudited Financial Results for the First Six Months of 2017

                                     2017 1H        % of Sales        2016 1H         % of Sales

    (In $000 except percentage data)

     Hepatitis
     A
     -
     Healive                                 12,879             19.2%           4,524              36.7%

     Hepatitis
     A&B
     -
     Bilive                                   4,928              7.4%         (1,143)            (9.3)%

     Hepatitis
     vaccines
     subtotal                                17,807             26.6%           3,381              27.4%

     Influenza
     vaccine                                    (6)             0.0%             710               5.8%

     Enterovirus
     71
     vaccine                                 48,751             72.9%           1,562              12.7%

     Mumps
     vaccine                                    356              0.5%             286               2.3%

     Regular
     sales                                   66,908            100.0%           5,939              48.2%

    H5N1                                          -               0%           6,392              51.8%


     Total
     sales                                   66,908            100.0%          12,331             100.0%


     Cost
     of
     sales                                    7,735             11.6%           8,363              67.8%


     Gross
     profit                                  59,173             88.4%           3,968              32.2%

Sales from continuing operations in the first half of 2017 were $66.9 million compared to $12.3 million in the prior year period. Sales increased primarily due to revenue generated by the Company's EV71 vaccine and a low comparison base in the second quarter of 2016 due to the Shandong vaccine scandal.

Gross profit from continuing operations was $59.2 million compared to gross profit of $4.0 million in the prior year period. The increase was primarily due to the contribution of EV71 vaccine sales in the first half of 2017. Gross margin was 88.4% compared to 32.2% in the prior year period. The low growth margin in the first half of 2016 was due to higher inventory provision provided for the hepatitis A&B and mumps vaccines, higher idle capacity costs charged to cost of sales, and a negative gross profit for the hepatitis A&B vaccine due to higher sales returns provision provided in the first half of 2016 as a result of the Shandong incident.

Selling, general and administrative expenses in the first half of 2017 were $36.7 million compared to $14.5 million in the same period of 2016. The Company's selling, general and administrative expenses increased with the higher level of sales activity. The Company also incurred a cost of $0.8 million relating to the proposed privatization of Sinovac.

R&D expenses in the first half of 2017 were $8.8 million compared to $4.9 million in the same period of 2016. The increase was mainly due to higher R&D expenses on the varicella and sIPV vaccine projects in the first half of 2017.

Income from continuing operations was $15.8 million compared to loss from continuing operations of $14.2 million in the prior year period.

Net income attributable to common shareholders was $10.9 million, or $0.19 per basic and diluted share, compared to net loss attributable to common shareholders of $8.3 million, or $(0.14) per basic and diluted share, in the prior year period.

Non-GAAP EBITDA was $15.9 million in the first half of 2017 compared to a loss of $11.9 million in the prior year period. Non-GAAP net income from continuing operations in the first half of 2017 was $16.2 million compared to a loss of $13.1 million in the prior year period. Non-GAAP diluted earnings per share from continuing operations in the first half of 2017 were $0.20 compared to a loss of $(0.17) per share in the prior year period. Reconciliations of non-GAAP measures to the nearest comparable GAAP measures are included at the end of this earnings announcement.

As of June 30, 2017, cash and cash equivalents totaled $55.0 million compared to $62.4 million as of December 31, 2016. For the six months ended June 30, 2017 net cash provided by operating activities was $5.1 million. Net cash used in investing activities was $6.8 million, which was due to the purchase of equipment. Net cash used in financing activities was $6.7 million, including loan proceeds of $11.2 million and loan repayments of $17.9 million. As of June 30, 2017, the Company had $21.8 million of bank loans due within one year. The Company expects that its current cash position will be able to support its operations for at least the next 12 months. The Company will seek new commercial bank loans to finance the commercialization of its pipeline products and for other operational purposes when appropriate.

About Sinovac

Sinovac Biotech Ltd. is a China-based biopharmaceutical company that focuses on the research, development, manufacturing and commercialization of vaccines that protect against human infectious diseases. Sinovac's product portfolio includes vaccines against enterovirus71, or EV71, hepatitis A and B, seasonal influenza, H5N1 pandemic influenza (avian flu), H1N1 influenza (swine flu), and mumps. The EV71 vaccine, an innovative vaccine developed by Sinovac against hand foot and mouth disease caused by EV71, was commercialized in China in 2016. In 2009, Sinovac was the first company worldwide to receive approval for its H1N1 influenza vaccine, which it has supplied to the Chinese Government's vaccination campaign and stockpiling program. The Company is also the only supplier of the H5N1 pandemic influenza vaccine to the government stockpiling program. The Company is developing a number of new products including a Sabin-strain inactivated polio vaccine, pneumococcal polysaccharides vaccine, pneumococcal conjugate vaccine and varicella vaccine. Sinovac primarily sells its vaccines in China, while also exploring growth opportunities in international markets. The Company has exported select vaccines to over 10 countries in Asia and South America. For more information, please visit the Company's website at www.sinovac.com.

Safe Harbor Statement

This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Factors that might cause such a difference include our inability to compete successfully in the competitive and rapidly changing marketplace in which we operate, failure to retain key employees, cancellation or delay of projects and adverse general economic conditions in the United States and internationally. These risks and other factors include those listed under "Risk Factors" and elsewhere in our Annual Report on Form 20-F as filed with the Securities and Exchange Commission. In some cases, you can identify forward-looking statements by terminology such as "may," "will," "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. 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. The Company assumes no obligation to update the forward-looking information contained in this release.

Non-GAAP Financial Measures

To supplement its consolidated financial statements, which are prepared and presented in accordance with GAAP, Sinovac uses the following non-GAAP financial measures: non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations. For more information on these non-GAAP financial measures, please refer to the table captioned "Reconciliations of non-GAAP Measures to the Nearest Comparable GAAP Measures" in this results announcement.

Sinovac believes that non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations help identify underlying trends in its business that could otherwise be distorted by the effect of certain income or expenses that Sinovac includes in income from operations from continuing operations, net income from continuing operations and diluted EPS from continuing operations. Sinovac believes that non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations provide useful information about its core operating results, enhance the overall understanding of its past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in its financial and operational decision-making. Non-GAAP EBITDA, non-GAAP net income from continuing operations and non-GAAP diluted EPS from continuing operations should not be considered in isolation or construed as an alternative to income from operations from continuing operations, net income from continuing operations, diluted EPS from continuing operations, or any other measure of performance or as an indicator of Sinovac's operating performance. The non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data.

Non-GAAP EBITDA represents income (loss) from continuing operations, excludes interest and financing expenses, interest income, net other income (expenses) and income tax benefit (expenses), and certain non-cash expenses, consisting of share-based compensation expenses, amortization and depreciation that Sinovac does not believe are reflective of the core operating performance during the periods presented.

Non-GAAP net income from continuing operations represents net income from continuing operations before share-based compensation expenses, and foreign exchange gain or loss.

Non-GAAP diluted EPS from continuing operations represents non-GAAP net income attributable to ordinary shareholders from continuing operations divided by the weighted average number of shares outstanding during the periods on a diluted basis, including accounting for the effect of the assumed conversion of options.

Contact

Sinovac Biotech Ltd.
Helen Yang
Tel: +86-10-8279-9871
Fax: +86-10-6296-6910
Email: ir@sinovac.com

ICR Inc.
Bill Zima
U.S: 1-646-308-1707
Email: william.zima@icrinc.com

 

                                                                  SINOVAC BIOTECH LTD.

                                                              CONSOLIDATED BALANCE SHEETS

                                                       As of June 30, 2017 and December 31, 2016

                                                        (Expressed in thousands of U.S. Dollars)


                                                                                                 June 30, 2017           December 31, 2016
                                                                                                 -------------           -----------------

    Current assets                                                                                (Unaudited)
                                                                                                   ----------


    Cash and cash equivalents                                                                                    $54,979                       $62,434

    Restricted cash                                                                                          -                       3,007

    Accounts receivable - net                                                                                   81,616                        49,832

    Inventories                                                                                                 17,854                        14,102

    Prepaid expenses and deposits                                                                                  958                         1,372

    Deferred tax assets                                                                                          5,909                         3,492

    Income tax recoverable                                                                                       1,092                             -

    Current assets held for sale                                                                             -                           -

    Total current assets                                                                                       162,408                       134,239
                                                                                                               -------                       -------


    Property, plant and equipment                                                                               72,990                        66,882

    Prepaid land lease payments                                                                                  8,788                         8,697

    Long-term inventories                                                                                           57                            98

    Long-term prepaid expenses                                                                                      24                            23

    Prepayment for acquisition of equipment                                                                        820                           964

    Deferred tax assets                                                                                            338                           452

    Total assets                                                                                               245,425                       211,355
                                                                                                               =======                       =======


    Current liabilities

    Short-term bank loans and current portion of long-                                                          21,841                        31,279
    term bank loans and other debt

    Loan from a non-controlling shareholder                                                                      2,360                         2,304

    Accounts payable and accrued liabilities                                                                    51,543                        24,960

    Income tax payable                                                                                       -                       3,178

    Deferred revenue                                                                                               300                         2,766

    Deferred government grants                                                                                   1,820                         1,777

    Current liabilities held for sale                                                                        -                           -

    Total current liabilities                                                                                   77,864                        66,264
                                                                                                                ------                        ------


    Deferred government grants                                                                                   2,578                         2,953

    Long-term bank loans                                                                                        12,307                         9,448

    Deferred revenue                                                                                               118                            89

    Other non-current liabilities                                                                                3,006                         2,935

    Total long-term liabilities                                                                                 18,009                        15,425
                                                                                                                ------                        ------


    Total liabilities                                                                                           95,873                        81,689
                                                                                                                ------                        ------


    Commitments and contingencies

    Equity

    Preferred stock                                                                                          -                           -

    Common stock                                                                                                    57                            57

    Additional paid in capital                                                                                 113,192                       112,668

    Accumulated other comprehensive income                                                                       3,340                           168

    Statutory surplus reserves                                                                                  14,788                        14,788

    Accumulated deficit                                                                                        (1,061)                     (11,914)
                                                                                                                ------                       -------

    Total shareholders' equity                                                                                 130,316                       115,767


    Non-controlling interests                                                                                   19,236                        13,899
                                                                                                                ------                        ------

    Total equity                                                                                               149,552                       129,666
                                                                                                               -------                       -------

    Total liabilities and equity                                                                                $245,425                       211,355

 

 

                                                                             SINOVAC BIOTECH LTD.

                                                            CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

                                                                For the six months ended June 30, 2017 and 2016

                                                                                  (Unaudited)

                                           (Expressed in thousands of U.S. Dollars, except for numbers of shares and per share data)


                                                                                                                                          Six months ended June 30
                                                                                                                                         ------------------------

                                                                                                                                                 2017                      2016

     Sales                                                                                                                                      $66,908                   $12,331

     Cost of sales                                                                                                                              7,735                     8,363
                                                                                                                                                -----                     -----

     Gross profit                                                                                                                              59,173                     3,968
                                                                                                                                               ------                     -----


     Selling, general and administrative expenses                                                                                              36,719                    14,464

     Provision for doubtful accounts                                                                                                              527                       565

     Research and development expenses                                                                                                          8,779                     4,851

     Loss on disposal of property, plant and equipment                                                                                             13                       121

     Government grants recognized in income                                                                                                       (4)                    (484)
                                                                                                                                                  ---                      ----

     Total operating expenses                                                                                                                  46,034                    19,517
                                                                                                                                               ------                    ------

     Operating income                                                                                                                          13,139                  (15,549)


     Interest and financing expenses                                                                                                            (822)                    (784)

     Interest income                                                                                                                              464                       453

     Other income                                                                                                                                 104                       236

     Income (loss) from continuing operations before                                                                                           12,885                  (15,644)
    income taxes

     Income tax benefit                                                                                                                         2,960                     1,492

     Income (loss) from continuing operations                                                                                                  15,845                  (14,152)

     Income from discontinued operations, net of tax                                                                                   -                       2,338
    of nil

     Net income (loss)                                                                                                                         15,845                  (11,814)

     Less: (Income) loss attributable to non-controlling interests                                                                            (4,992)                    3,564
                                                                                                                                               ------                     -----

     Net income (loss) attributable to shareholders of                                                                                         10,853                   (8,250)
    Sinovac



     Income (loss) from continuing operations                                                                                                  15,845                  (14,152)

     Other comprehensive loss from continuing
    operations, net of tax of nil

    Foreign currency translation adjustments                                                                                                    3,517                   (4,300)
                                                                                                                                                -----                    ------

     Comprehensive income (loss) from continuing                                                                                               19,362                  (18,452)
    operations


     Income from discontinued operations                                                                                               -                       2,338

     Other comprehensive income (loss) from
    discontinued operations, net of tax of nil

    Foreign currency translation adjustments                                                                                           -                           -
                                                                                                                                     ---                         ---

     Comprehensive income from discontinued                                                                                            -                       2,338
    operations


     Comprehensive income (loss)                                                                                                               19,362                  (16,114)

      Less: comprehensive (income) loss attributable to non-                                                                                  (5,337)                    3,836
    controlling interests


     Comprehensive income (loss) attributable to                                                                                                $14,025                 $(12,278)
    shareholders of Sinovac



    Earnings (loss) per share

    Basic net income (loss) per share:

    Continuing operations                                                                                                                        0.19                    (0.19)

    Discontinued operations                                                                                                                      0.00                      0.05

    Basic net income (loss) per share                                                                                                            0.19                    (0.14)


    Diluted net income (loss) per share:

    Continuing operations                                                                                                                        0.19                    (0.19)

    Discontinued operations                                                                                                                      0.00                      0.05

    Diluted net income (loss) per share                                                                                                          0.19                    (0.14)



     Weighted average number of shares of common stock
    outstanding

      Basic                                                                                                                                57,015,223                56,922,175

      Diluted                                                                                                                              57,036,805                56,990,675

 

 

                                                                                      SINOVAC BIOTECH LTD.

                                                                              CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                         For the six months ended June 30, 2017 and 2016

                                                                                           (Unaudited)

                                                                            (Expressed in thousands of U.S. Dollars)


                                                                                                                           Six months ended June 30
                                                                                                                           ------------------------

                                                                                                                                 2017                      2016

    Cash flows provided by (used in) operating activities

    Income (loss) from continuing operations                                                                                    $15,845                 $(14,152)

    Adjustments to reconcile net income to net cash provided by (used
    in) operating activities:

     - Deferred income taxes                                                                                                  (2,178)                       68

     - Share-based compensation                                                                                                   484                       632

     - Inventory provision                                                                                                        274                     2,751

     - Provision for doubtful accounts                                                                                            527                       565

     - Loss on disposal and impairment of property, plant and equipment                                                            13                       121

     - Government grants recognized in income                                                                                     (4)                    (484)

     - Depreciation of property, plant and equipment and amortization of                                                        2,123                     2,874
    licenses

     - Amortization of prepaid land lease payments                                                                                117                       126

    Changes in:

     - Accounts receivable                                                                                                   (30,705)                    8,301

     - Inventories                                                                                                            (3,598)                  (6,313)

     - Income tax payable                                                                                                     (4,289)                  (2,840)

     - Prepaid expenses and deposits                                                                                              440                       116

     - Deferred revenue                                                                                                       (2,473)                  (7,568)

     - Accounts payable and accrued liabilities                                                                                25,482                       303

     - Deferred government grants                                                                                        -                         31

     - Restricted cash                                                                                                          3,037                         -

    Net cash provided by (used in) operating activities from                                                                    5,095                  (15,469)
    continuing operations

    Net cash used in operating activities from discontinued                                                              -                       (95)
    operations


    Net cash provided by (used in) operating activities                                                                         5,095                  (15,564)
                                                                                                                                -----                   -------


    Cash flows provided by (used in) financing activities

     - Proceeds from bank loans                                                                                                11,171                    22,654

     - Repayments of bank loans                                                                                              (17,948)                 (17,751)

     - Proceeds from issuance of common stock, net of share issuance                                                               35                       760
    costs

     - Proceeds from shares subscribed                                                                                   -                         36

     - Government grant received                                                                                                   92                         -
                                                                                                                                  ---                       ---

    Net cash provided by (used in) financing activities                                                                       (6,650)                    5,699
                                                                                                                               ------                     -----


    Cash flows used in investing activities

     - Acquisition of property, plant and equipment                                                                           (6,768)                  (4,611)

     - Proceeds from disposal of subsidiary                                                                              -                        875

    Net cash used in investing activities from continuing                                                                     (6,768)                  (3,736)
    operations

    Net cash used in investing activities from discontinued                                                              -                        (9)
    operations


    Net cash used in investing activities                                                                                     (6,768)                  (3,745)
                                                                                                                               ------                    ------


    Effect of exchange rate changes on cash and cash                                                                              868                   (1,149)
    equivalents, including cash classified within current assets
    held for sale


    Decrease in cash and cash equivalents, including cash                                                                     (7,455)                 (14,759)
    classified within current assets held for sale

    Less: Net decrease in cash classified within current assets for sale                                                 -                      (143)

    Decrease in cash and cash equivalents                                                                                     (7,455)                 (14,616)


    Cash and cash equivalents, beginning of period                                                                             62,434                    63,834
                                                                                                                               ------                    ------


    Cash and cash equivalents, end of period                                                                                    $54,979                   $49,218

 

 

                                                                                     SINOVAC BIOTECH LTD.

                                                         RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES

                                                                       For the six months ended June 30, 2017 and 2016

                                                                                         (Unaudited)

                                                  (Expressed in thousands of U.S. Dollars, except for numbers of shares and per share data)


                                                                                                                                             Six months ended June 30
                                                                                                                                            ------------------------

                                                                                                                                                     2017                   2016

     Income (loss) from continuing operations                                                                                                       $15,845              $(14,152)

     Adjustments:

       Share-based compensation                                                                                                                       484                    632

       Depreciation and amortization                                                                                                                2,240                  3,000

       Interest and financing expenses, net of interest income                                                                                        358                    331

       Net other income                                                                                                                             (104)                 (236)

       Income tax benefit                                                                                                                         (2,960)               (1,492)
                                                                                                                                                   ------                 ------

     Non-GAAP EBITDA                                                                                                                               15,863               (11,917)
                                                                                                                                                   ======                =======


     Income (loss) from continuing operations                                                                                                       $15,845               (14,152)

       Add: Foreign exchange loss (gain)                                                                                                            (135)                   403

       Add: Share-based compensation                                                                                                                  484                    632
                                                                                                                                                      ---                    ---

     Non-GAAP net income (loss) from continuing                                                                                                    16,194               (13,117)
    operations



     Net income (loss) from continuing operations                                                                                                  10,853               (10,588)
    attributable to shareholders of Sinovac

     Add: Non-GAAP adjustments to net income from                                                                                                     349                  1,035
    continuing operaitons


     Non-GAAP net income attributable to shareholders of                                                                                           11,202                (9,553)
    Sinovac from continuing operations for computing non-
    GAAP diluted earnings (loss) per share



     Weighted average number of shares on a diluted                                                                                            57,036,805             56,990,675
    basis

     Diluted earnings (loss) per share from continuing                                                                                               0.19                 (0.19)
    operations

     Add: Non-GAAP adjustments to net income per share                                                                                               0.01                   0.02
    from continuing operatons

     Non-GAAP Diluted earnings (loss) per share from                                                                                                 0.20                 (0.17)
    continuing operations

 

 

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SOURCE Sinovac Biotech Ltd.

 
 
Company Codes: NASDAQ-NMS:SVA
 

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