PLYMOUTH MEETING, Pa., Nov. 9 /PRNewswire-Asia-FirstCall/ -- BMP Sunstone Corporation (“BMP Sunstone” or the “Company”), today announced financial results for the third quarter ended September 30, 2009.
David Gao, Chief Executive Officer of BMP Sunstone, stated, “We are pleased with our financial performance in the third quarter of 2009. The inventory and distribution challenges from last quarter appear to be subsiding and we are encouraged with the ongoing demand we see for our portfolio of leading prescription and over the counter brands. Our licensed products revenue was particularly strong this quarter and, in conjunction with a revenue mix shift toward higher margin products at Sunstone and Beijing Med-Pharm, improved our gross margin performance year over year. On the cost side, we reinvested for growth primarily through research and development at Sunstone. We believe the healthcare market in China continues to grow by 15-20 percent annually and we continue to anticipate outperforming the industry growth rate over the long term.”
Third Quarter 2009 Financial Results
Revenue in the third quarter of 2009 increased 10.2% to $33.6 million from $30.5 million in the third quarter of 2008, reflecting increased demand for the Company’s licensed and branded OTC products. Revenue from Sunstone (Tangshan) Pharmaceutical Co., Ltd. (“Sunstone”), increased 10.2% $17.1 million of revenue, from $15.5 million in the prior year period. Revenue from licensed products increased 57.3% to $2.1 million from $1.3 million in the prior year period, reflecting sales and marketing efforts of Anpo, Propess and Ferriprox compared to the prior year. Revenue from distribution in the third quarter of 2009 was up slightly to $14.5 million from $13.7 million in the prior year period, as the Company deliberately focused less on driving low margin distribution revenue and more on increasing high margin product sales.
Gross profit in the third quarter of 2009 increased to $15.7 million from $13.8 million in the third quarter of 2008. Gross margin was 46.6%, compared to 45.3% in the prior year period. Gross margin performance primarily reflects revenue mix shift toward higher margin products during the quarter, versus prior periods.
Operating income was $1.0 million in the third quarter of 2009, compared to $1.8 million in the third quarter of 2008. Operating expenses increased 21.3% from the year ago period, primarily reflecting a $1.2 million increase in research and development expenditure, as the Company positions itself to drive future growth. Additionally, general and administrative expenses as a percentage of revenue increased to approximately 14.3%, up from 9.5% in the
prior year period, reflecting a $525,000 reversal for an over accrual of social taxes in prior years.
Non-GAAP net income was $1.3 million, or $0.03 per diluted share, compared to $1.9 million, or $0.05 per diluted share, in the third quarter of 2008. On a GAAP basis, the Company reported a net loss of $208,000 in the third quarter of 2009, or ($0.01) per share, compared to a net loss of $816,000, or ($0.02) per share, in the prior year period. Adjusted EBITDA was $2.6 million for the quarter, compared to $3.6 million in the third quarter of last year. The earnings per share calculation is based on 50.8 million diluted shares outstanding, compared to 40.8 million diluted shares outstanding in the prior year period.
Non-GAAP net income and earnings per share exclude stock based compensation expense, amortization related to the Sunstone and Wanwei acquisitions, amortization of debt discount and issuance cost, loss on early extinguishment of debt and gain on the embedded derivative value on convertible notes. Adjusted EBITDA is a non-GAAP measure which provides earnings before interest, taxes, depreciation and amortization and excludes loss on early extinguishment of debt and gain on the embedded derivative value on convertible notes. Please refer to the financial tables provided in this news release for a reconciliation of GAAP results to non-GAAP results for the three and nine month periods ended September 30, 2008 and 2009.
Balance Sheet
On September 30, 2009, the Company had $13.2 million of cash and $10.6 million of notes receivable, totaling approximately $23.8 million. All notes receivables are guaranteed by established banks in China and have maturities of six months or less. Additionally, $7.6 million of other receivables is due from Alliance Unichem in August of 2010.
Financial Results for the Nine Months Ended September 30, 2009 For the nine months ended September 30, 2009, revenue increased 34.7% to $105.4 million from $78.2 million in the first nine months of 2008. During this same time period, gross profit increased 33.1% to $50.7 million from $38.1 million. Income from operations increased 120.5% to $4.4 million, compared to $2.0 million in the first nine months of 2008. Non-GAAP net income was $4.6 million, or $0.10 per diluted share, compared to $3.1 million, or $0.08 per diluted share, in the prior year period. On a GAAP basis, the Company reported a net loss of $3.9 million, or ($0.10) per share, compared to $4.9 million, or ($0.13) per share, in the first nine months of 2008. Adjusted EBITDA was $9.0 million, compared to $7.4 million in the first nine months of 2008. The EPS calculation is based on 48.2 million diluted shares outstanding, compared to 39.4 million diluted shares outstanding in the prior year period.
Financial Guidance
Due to slower than expected growth rates in the second quarter of 2009, today BMP Sunstone is adjusting revenue, adjusted EBITDA and non-GAAP net income guidance for the fiscal year 2009. The Company now expects revenue to reach $140 million to $150 million, adjusted EBITDA to reach $12 million to $13 million, and non-GAAP net income to reach $6 million to $7 million.
Today’s revisited guidance is down from previous full year expectations of $150 million to $160 million in revenue, $16 million to $18 million in adjusted EBITDA, and $9 million to $11 million in non-GAAP net income.
Gao continued, “We believe that declines in purchases from distributors hit a low point during the second quarter, improved during the third quarter, and should noticeably improve when the pending Chinese healthcare policies are finalized and disclosed. Our 2009 financial guidance reflects sales and marketing expansion in China resulting from continued performance at all of our business units, especially at Sunstone and Beijing Med-Pharm.”
Conference Call
The Company will hold a conference call at 5:00 pm ET on November 9, 2009 to discuss third quarter 2009 results. Listeners may access the call by dialing 1-888-713-4211 or +1-617-213-4864 for international callers, access code: 20626681. Preregistration and a webcast will be available through the Company’s website at http://www.bmpsunstone.com . A replay of the call will be
accessible through November 16, 2009 by dialing 1-888-286-8010 or +1-617-801-6888 for international callers, access code: 24243405.
About BMP Sunstone Corporation
BMP Sunstone Corporation (“BMP Sunstone” or the “Company”) is a specialty pharmaceutical company that is building a proprietary portfolio of branded pharmaceutical and healthcare products in China. Through Sunstone Pharmaceutical Co. Ltd., the Company manufactures leading pediatric and women’s health products, including two of China’s most recognized brands, “Hao Wawa” and “Confort,” sold throughout the country in approximately 120,000 pharmacies. The Company also markets a portfolio of products under exclusive multi-year licenses into China, primarily focused on women’s health and pediatrics, as well as provides pharmaceutical distribution services through subsidiaries in Beijing and Shanghai. BMP Sunstone’s main office is in Beijing, with a U.S. office in Plymouth Meeting, PA. For more information, please visit http://www.bmpsunstone.com .
Safe Harbor Statement
This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts, including but not limited to statements regarding the impact of changes in China’s healthcare industry on the Company’s growth and financial performance, the Company’s expected financial performance in 2009 and the Company’s expectations for each of its business units in 2009. These statements are subject to uncertainties and risks including, but not limited to, operating performance, the timing of China’s healthcare reform policy, general financial, economic, and political conditions affecting the biotechnology and pharmaceutical industries and the Chinese pharmaceutical market, the ability to timely manufacture and distribute the Company’s products and other risks contained in reports filed by the Company with the Securities and Exchange Commission. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
CONTACT: BMP Sunstone Corporation, Fred M. Powell, Chief Financial
Officer, +1-610-940-1675, or fpowell@bmpsunstone.com; Integrated Corporate
Relations, Inc., Ashley M. Ammon, +1-646-277-1227, or
Ashley.Ammon@icrinc.com
