HAIKOU CITY, Hainan Province, China, May 15 /Xinhua-PRNewswire-FirstCall/ -- China Pharma Holdings, Inc. (''China Pharma’’) , a specialty bio-pharmaceutical company that develops, manufactures and markets Western and Chinese medicines, today announced its financial results for the first quarter 2007 ended March 31, 2007.
First Quarter 2007 Highlights -- Revenue increased 52.8% year-over-year to $7.2 million -- Newly introduced hepatocyte growth promoting factor and ozagrel sodium represented 8.5% and 10.7% of revenue, respectively -- Net income was $2.4 million, up 46.6% year-over-year
China Pharma’s revenue in the first quarter of 2007 was $7.2 million, up 52.8% year-over-year from $4.7 million. The revenue increase for the quarter is attributed to a larger number of therapeutics on the market and increased market penetration. Gross profit increased 49.5% to $3.3 million from $2.2 million in the first quarter of 2006. Net income was $2.4 million, up 46.6% from $1.6 million in the same period a year ago. Results in the first quarter of 2007 benefited from net proceeds of $0.7 million from the sale of two pharmaceutical formulas. Fully diluted earnings per share were $0.07 compared to $0.05 in the first quarter 2006.
''We are happy to report another quarter of increasing revenue and net income growth. Our increased market penetration for our existing portfolio combined with the wide acceptance of our newly introduced therapeutics hepatocyte growth promoting factor and ozagrel sodium contributed to our strong revenue growth,’' commented Ms. Zhi-lin Li, President and CEO of China Pharma.
Revenue growth for the quarter was led by growth in sales of gastrodin, which increased over 200%, and cefaclor, which increased over 100% from the first quarter of 2006. Sales of newly launched hepatocyte growth factor and ozagrel remained strong, contributing to 8.5% and 10.0% of revenue, respectively. No single therapeutic accounted for more than 15% of revenue during the quarter.
Gross profit for the first quarter of 2007 was $3.3 million, up 49.5% from $2.2 million in the first quarter of 2006. Gross margin was 45.6% compared to 46.6% from the same period a year ago. The slight variation in gross margin is attributed to product mix.
Selling expenses were $0.1 million for the quarter, or 2.0% of revenue, compared to $0.1 million, or 1.9% of revenue, in the same quarter last year. The slight increase in selling expenses was due to the increase in overall sales.
General and administrative (G&A) expenses were $1.4 million, or 19.1% of revenue, in the first quarter of 2007 compared to $0.3 million, or 5.6% of revenue, in the same period a year ago. G&A expense includes a $1.0 million write off of bad debt in during the quarter. Because the pharmaceutical industry in China typically has long collection cycles, the company writes off 50% of any receivables outstanding for more than twelve months. In the past, China Pharma has recovered outstanding long-term receivables.
The company recognized $0.8 million in research and development (''R&D’’) expense during the quarter. The R&D expense represents costs associated with the sale of technological formulas during the quarter. Income from operations was $0.9 million compared to $1.9 million in the first quarter of 2006.
During the quarter, China Pharma received $1.5 million in other income associated with the sale of technological formulas in the research and development stage. The company periodically sells certain technological formulas it determines will provide a higher return on investment in lieu of fully developing and launching these drugs in the market. Net income for the first quarter of 2007 was $2.4 million, up 46.6% from $1.6 million in the first quarter of 2006. Fully diluted earnings per share were $0.07 compared to fully diluted earnings per share of $0.05. Fully diluted shares outstanding in the first quarter of 2007 were 36.3 million compared to 34.7 million in the comparable period a year ago.
Financial Condition
As of March 31, 2007, China Pharma had $3.0 million in cash and cash equivalents, total liabilities of $8.1 million and working capital of $24.5 million. Days sales outstanding were 174 days. Shareholders’ equity stood at $27.2 million compared to $20.9 million as of December 31, 2006.
Business Outlook
China Pharma has developed a diversified portfolio of therapeutics that, in aggregate, has contributed to revenue growth as the company expands its market penetration. It has already received approval for granisetron hydrochloride which it plans to launch in the second half of 2007. Moreover, the company is benefiting from the People’s Republic of China’s (PRC) commitment of $1.3 billion this year to expand its rural cooperative medical system to cover the entire country by 2010. China Pharma is reaffirming its full year guidance for 2007 of 30% increase in net income over 2006.
''We have developed a strong position in the pharmaceutical industry in China which supports our continued growth in both revenues and net income. The Chinese government is implementing some important changes which will benefit China Pharma, namely the new rural cooperative medical-care system and longer-term the State Food and Drug Administration’s tighter controls on the oversight of the drug approval process,’' commented Ms. Li. ''We feel both of these changes are positive for the industry and will enhance our competitive position.’'
Conference Call
China Pharma will host a conference call on Tuesday, May 15 at 10:00 am EDT to discuss first quarter 2007 results. To participate in the conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (888) 481-7939. International callers should dial (617) 847-8707. The conference passcode is 845 135 91.
If you are unable to participate in the call at this time, a replay will be available on May 15th at 12:00 pm EDT, through May 22nd. To access the replay, dial (888) 286-8010. International callers should dial (617) 801-6888. The conference passcode is 71744541.
The conference will be broadcast live over the Internet and can be accessed by all interested parties at China Pharma’s website at http://www.chinapharmaholdings.com . To listen to the call please go to the website at least 15 minutes prior to the start of the call to register, download and install any necessary audio software.
About China Pharma Holdings, Inc.
China Pharma Holdings, Inc. develops, manufactures, and markets generic and brand bio-pharmaceutical products in China that treat a wide range of conditions, including infections, hepatitis, vascular, CNS and other prevailing diseases. Helpson Bio-pharmaceutical Co., Ltd (Helpson), a specialty bio-pharmaceutical company headquartered in Haikou City, Hainan province in China, is a wholly owned subsidiary of China Pharma Holdings. For more information on the Company go to http://www.chinapharmaholdings.com .
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Certain statements in this press release and oral statements made by China Pharma on its conference call in relation to this release, constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Any statements set forth above that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include, but are not limited to, such factors as unanticipated changes in product demand, increased competition, failure to obtain or maintain intellectual property protection, downturns in the Chinese economy, uncompetitive levels of research and development, failure to obtain regulatory approvals, and other information detailed from time to time in the Company’s filings and future filings with the United States Securities and Exchange Commission. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.
CHINA PHARMA HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (unaudited) For the three months ended March 31, 2007 2006 Revenue $7,233,768 $4,732,991 Cost of revenue 3,934,849 2,526,020 Gross profit 3,298,919 2,206,971 Operating expenses: Selling expenses 147,883 88,030 General and administrative 1,380,076 264,200 Research and development 836,404 -- Total operating expenses 2,364,363 352,230 Income from operations 934,556 1,854,741 Non-operating income (expenses): Interest income 13,775 147 Interest expense (56,899) (23,799) Other income 1,482,607 22,636 Total non-operating income (expense) 1,439,483 (1,016) Income before taxes 2,374,039 1,853,725 Income tax expense -- (234,789) Net income $2,374,039 $1,618,936 Comprehensive income - foreign currency translation adjustments 216,416 59,085 Comprehensive income $2,590,455 $1,678,021 Basic and diluted earnings per common share $0.07 $0.05 Weighted-average common shares outstanding 36,337,958 34,723,056 CHINA PHARMA HOLDINGS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited) March 31, December 31, 2007 2006 ASSETS Current Assets: Cash and cash equivalents $2,950,719 $656,441 Trade accounts receivable, less allowance for doubtful of $2,603,164 and $1,562,494, respectively 13,956,681 12,101,979 Other receivables, less allowance for doubtful accounts of $29,244 and $27,517, respectively 1,634,790 355,554 Deferred offering costs -- 59,390 Advances to suppliers 2,538,017 2,255,877 Inventory 11,476,631 10,277,887 Total Current Assets 32,556,838 25,707,128 Non-current Assets: Property and equipment, net of accumulated depreciation of $713,323 and $619,649, respectively 2,660,818 2,725,173 Intangible assets, net of accumulated amortization of 192,778 and $184,175, respectively 59,208 65,344 Deferred tax assets 16,901 16,736 Total Non-current Assets 2,736,927 2,807,253 TOTAL ASSETS $35,293,765 $28,514,381 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities: Trade accounts payable $735,664 $477,291 Accrued expenses 133,317 104,216 Accrued taxes payable 248,139 167,419 Other payables 112,828 185,096 Advances from customers 149,870 141,871 Accounts payable -related parties 45,544 22,650 Short-term notes payable 6,598,260 6,533,649 Total Current Liabilities 8,023,622 7,632,192 Research and development commitments 32,296 31,980 Total Liabilities 8,055,918 7,664,172 Stockholders’ Equity: Common stock, $0.001 par value, 60,000,000 shares authorized, 37,228,938 and 34,723,056 shares issued and outstanding, respectively 37,229 34,723 Additional paid-in capital 11,559,656 7,764,979 Foreign currency translation adjustment 880,287 663,871 Retained earnings 14,760,675 12,386,636 Total Stockholders’ Equity 27,237,847 20,850,209 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $35,293,765 $28,514,381 CHINA PHARMA HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) For the three For the three months ended months ended March 31, March 31, 2007 2006 Cash Flows from Operating Activities: Net income $2,374,039 $1,618,936 Depreciation and amortization 100,063 85,140 Changes in assets and liabilities: Trade accounts receivable (1,728,236) (2,541,404) Other receivables (1,309,181) (296,864) Advances to suppliers (258,815) 401,068 Inventory (1,092,813) (765,072) Deferred tax assets -- (25,892) Deferred offering costs 59,743 -- Trade accounts payable 247,713 728,040 Accrued expenses 27,960 16,465 Accrued taxes payable 78,756 372,256 Other payables 88,814 (44,269) Advances from customers 6,571 (264) Net Cash Used in Operating Activities (1,405,386) (451,860) Cash Flows from Investing Activities: Purchase of property and equipment (2,360) (22,074) Sale of technology 38,453 -- Purchase of intangible assets -- (2,472) Net Cash (Used) by Investing Activities 36,093 (24,546) Cash Flows from Financing Activities: Proceeds from sale of common stock and warrants 3,797,183 -- Related party payables/receivables (138,860) -- -- -- Net Cash Proceeds from Financing Activities 3,658,323 -- Effect of Exchange Rate Changes on Cash 5,247 90,110 Net Change in Cash 2,294,277 (386,296) Cash and Cash Equivalents at Beginning of Period 656,441 461,220 Cash and Cash Equivalents at End of Period $2,950,718 $74,924 For more information, please contact: Crocker Coulson, President, or Leslie Richardson, Financial Writer CCG Elite Tel: +1-310-231-8600 x103 Email: crocker.coulson@ccgir.com
China Pharma Holdings, Inc.
CONTACT: Crocker Coulson, President, or Leslie Richardson, FinancialWriter of CCG Elite, +1-310-231-8600 x103, or crocker.coulson@ccgir.com
Web site: http://www.chinapharmaholdings.com/
