HARBIN, China, Aug. 12 /Xinhua-PRNewswire-FirstCall/ -- China Sky One Medical, Inc. ("China Sky One Medical" or "the Company") , a China based developer, manufacturer, marketer and international distributor of pharmaceutical, medicinal and diagnostic products, today announced record financial results for the second quarter ended June 30, 2008.
"We continued to see strong growth in product sales during the second quarter of 2008 and are very pleased with our record results," said Mr. Yan- Qing Liu, Chairman, CEO and President of China Sky One Medical, Inc. "By category, sales of ointments increased sharply during the second quarter, accounting for 28% of revenues. Top selling branded products included our Compound Camphor Cream and our Hemorrhoids Ointment. Sales of weight loss products, which include our top selling Slim Patch, also increased during the quarter, making up 25% of sales. That was followed by increases in sales of sprays, which made up 13% of revenues in the quarter, and sales of biochemical products, such as our diagnostic kits, which made up 10% of revenues."
"In addition to our continued strong sales momentum during the quarter, we realized a number of significant accomplishments, including the listing of our common shares on the American Stock Exchange under the symbol "CSY," said Mr. Yan-Qing Liu. "We completed the acquisitions of Heilongjiang Tianlong Pharmaceutical, Inc., which has a state-of-the-art manufacturing capabilities and a portfolio of 69 (SFDA) approved drugs with a strong pipeline, and Heilongjiang Haina Pharmaceutical, Inc., which has a Good Supply Practice (GSP) license that will allow us to expand our sales of medicinal products." During the quarter, the Company also received approval from the (SFDA) for six new drugs, and five new patches.
On June 12, the Company entered into an agreement to acquire Peng Lai Jin Chuang Company ("Jin Chuang") for $4.6 million in China Sky One common stock and $2.5 million in cash. The Jin Chuang acquisition brings a portfolio of 20 approved drugs that are taken internally, an important addition to the Company's portfolio of products.
Second Quarter 2008 Results
Total revenues for the second quarter of 2008 grew 62.1% to $23.7 million from $14.6 million in the second quarter of 2007. This was primarily the result of strong performance associated with the Company's continued efforts to develop its sales distribution channels. Product sales increased 103% year- over-year to $21.9 million, accounting for 92.2% of total revenues. Contract sales decreased 52.3% to $1.8 million and accounted for 7.8% of revenues in the second quarter. In 2008, the Company began to discontinue contract sales as part of its strategic goals.
Gross profit in the second quarter of 2008 was $18.2 million, an increase of 60.8% over the same period a year ago. Gross margin was 76.7% of total revenues, in line with a gross margin of 77.4% for the second quarter of 2007.
Operating expenses in the second quarter of 2008 were $8.1 million, up 33% from $6.1 million in the second quarter of 2007. This increase was less than the increase in sales, and was primarily a result of higher selling, general and administrative expenses associated with the Company's sales growth. Research and development expenses were $1.3 million in the second quarter, compared to $0.3 million in the second quarter of 2007. Operating expenses were 34.1% of total revenues in the second quarter of 2008, down from 42.1% in the second quarter of 2007, due to efficiencies as the Company grows in scale.
Operating income was $10.1 million, compared with $5.2 million in the second quarter of 2007. Operating margin was 42.6%, compared to 35.2% in the second quarter of 2007. Provision for income taxes was $1.8 million in the second quarter of 2008, compared to $0.9 million in the same quarter of the previous year.
Net income for the second quarter of 2008 increased 91.9% to $8.1 million, or $0.50 per diluted share, compared to $4.2 million, or $0.34 per diluted share, in the second quarter of 2007. Fully diluted weighted average shares increased to 16,090,211 from 12,531,385 in the second quarter of 2007 due to common stock associated with the Company's private placement in February 2008 and the conversion of warrants.
Six Month Results
For the first half of 2008, revenues increased to $36.2 million, up 82.4% from $19.8 million in the corresponding period of 2007. Gross profit increased 80.5% to $27.8 million in the first six months of 2008, versus $15.4 million in the same period a year ago. Gross margin was 76.8% in the first half of 2008 compared to 77.6% during the first half of 2007. Operating income in the first half of 2008 grew 111.7% to $15 million compared to $7.1 million in the first half 2007. Net income for the first six months of 2008 was $12 million or $ 0.78 per diluted share, up 107.1% from $5.8 million, or $0.46 per diluted share in the first half of 2008.
Financial Condition
As of June 30, 2008, China Sky One had $42.5 million in cash and equivalents, approximately $44.9 million in working capital, and no debt. Stockholders' equity at June 30, 2008 was $71.7 million, a 122.5% increase over $32.2 million recorded at December 31, 2007. The Company generated $17.8 million in net cash flow from operating activities in the first half of 2008, up from $8.4 million in the same quarter of 2007.
Recent Events
On July 8, 2008, China Sky One Medical announced the development of a propyl gallate injection for the treatment of acute cerebral infarction, coronary heart disease, thrombosis, dysmenorrheal and nephropathy. The Company is now in the last stage before formal production and expects to launch the product in the middle of August. It estimates that sales of the propyl gallate injection will add at least $3 million in revenue to the fourth quarter.
On July 10, 2008, the Company announced that 11 new drugs entered into clinical trials, including seven that are administered by injection. China Sky One Medical has a history of successfully producing external use drugs and is now committed to developing drugs for injection, a market where it sees significant potential. These newly developed drugs have the potential to expand the Company's market share and increase profitability going forward.
On July 15, 2008, China Sky One Medical signed an agreement with Harbin Baolong Pharmaceutical Company. Under the agreement, Baolong will distribute China Sky One's prescription drugs. Prescription drugs manufactured by China Sky One have doubled as a result of recent acquisitions, and now make up approximately 30% of its total product line. The agreement, which initially runs over five years, has a total estimated value of approximately $9 million. To date, China Sky One Medical has been selling five of its prescription drugs through Baolong's distribution network, which it expects to generate sales of approximately $3 million from August 2008 to December 2008.
Business Outlook
"We made significant progress during the second quarter while further positioning the company for future growth, said Mr. Yan-Qing Liu. "As a result of the synergies we will realize from our strategic acquisitions, and by focusing on developing high-quality products and expanding our sales and marketing efforts globally, we expect to see a significant increase in our profitability in the coming years."
As a result of recent acquisitions, the Company expects full-year 2008 gross revenue in the range of $81 million to $83 million, and gross margins of approximately 78.5%. The Company estimate net income for 2008 to be in the range of $25.9 million to $26.6 million, or $1.68 to $1.73 per fully diluted share based on 15,372,106 diluted shares outstanding for the six month period ended June 30, 2008. Net margin for the year is expected to be approximately 32%.
Conference Call
The Company will conduct a conference call at 10 a.m. Eastern Time on Tuesday, August 12, 2008 to discuss the second quarter 2008 results. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 866-573-1052 International callers should dial 702- 696-4500. The Conference ID for this call is 59672695. If you are unable to participate in the call at this time, a replay will be available for fourteen days starting on Tuesday, August 12, 2008 at 12:00 p.m. Eastern Time. To access the replay, dial 800-642-1687, international callers dial 706-645-9291, conference ID 59672695.
About China Sky One Medical, Inc.
China Sky One Medical, Inc., a Nevada corporation, is engaged in the manufacturing, marketing and distribution of pharmaceutical, medicinal and diagnostic products. Through its wholly-owned subsidiaries, Harbin Tian Di Ren Medical Science Technology Company, Harbin First Bio- Engineering Company Limited, Heilongjiang Tianlong Pharmaceutical, Inc.,") and Heilongjiang Haina Pharmaceutical Inc., the Company manufactures and distributes over-the- counter pharmaceutical products as its primary revenue source. For more information, visit http://www.skyonemedical.com .
Safe Harbor Statement
Certain of the statements made in the press release constitute forward- looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements can be identified by the use of forward- looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," or "anticipate" or the negative thereof or comparable terminology. Additional statements that are necessarily forward looking in nature also include, without limitation, statements relating to our research and development activities, expected revenues or sales margins, results of recent acquisitions and our ability to increase sales and expand our presence in the global market place, and risks or uncertainties relating to PRC socioeconomic issues. Such statements typically involve risks and uncertainties and may include financial projections or information regarding our future plans, objectives or performance. The Company cannot provide any assurance that it will be able to establish listing of its securities on any national or regional securities exchange or market system. Actual results could differ materially from the expectations reflected in such forward- looking statements as a result of a variety of factors, including the inability of the company to meet listing standards of an exchange, risks associated with the effect of changing economic conditions in The People's Republic of China, variations in cash flow, reliance on collaborative retail partners both in China and throughout the world and on new product development, variations in new product development, risks associated with rapid technological change, and the potential of introduced or undetected flaws and defects in products, and other risk factors detailed in reports filed with the Securities and Exchange Commission from time to time.
CONTACT: Company Contact: China Sky One Medical, Inc. - Mr. Yu-bo Hao,
Board Secretary, +86-451-5399-4069, or china_sky_one@yahoo.com; Investor
Relations Contact: CCG Investor Relations - Mr. Crocker Coulson, President,
+1-646-213-1915, or crocker.coulson@ccgir.com; Mr. Richard Micchelli,
Financial Writer, +1-646-454-4516, or richard.micchelli@ccgir.com
Web site: http://www.skyonemedical.com/
http://www.ccgir.com//
