Sinovac Reports Unaudited First Half of 2017 Financial Results
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.
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.
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.
Sinovac Biotech Ltd.
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
SOURCE Sinovac Biotech Ltd.
Company Codes: NASDAQ-NMS:SVA