LAIYANG, China, Sept. 30 /Xinhua-PRNewswire-FirstCall/ -- Genesis Pharmaceuticals Enterprises, Inc. ("Genesis" or the "Company"), a U.S. pharmaceutical company with its principal operations in the People's Republic of China, today announced its financial results for its fourth quarter and fiscal year ended June 30, 2008. A 10-K Form was filed for the year with the U.S. Securities Exchange Commission that is available through the Company's website and from the SEC.
Fourth Quarter FY 2008 Highlights
-- Revenue was $28.3 million, up 39.0% from the corresponding quarter in 2007
-- Gross profit was $23.5 million, up 57.7% from the corresponding quarter in 2007, and gross margin was 83.2%, compared to 73.3% in the corresponding quarter in 2007
-- Operating income was $10.1 million, up 42.2% from the corresponding quarter in 2007
-- Net income was $9.6 million, compared to $14.6 million in the corresponding quarter in 2007
-- Gross profit was $77.0 million, up 40.0% from the year ended June 30, 2007, and gross margin was 77.4%, compared to 72.2% in the year ended June 30, 2007
-- Operating income was $32.2 million, up 75.9% from the year ended June 30, 2007
-- Net income was $22.5 million, up 1.8% from the year ended June 30, 2007, with earnings of $1.84 per diluted share
-- Completed private placements for a total of $35 million of convertible notes and 2,275,000 warrants
-- Began manufacturing and distributing Baobaole chewable tablets, a Traditional Chinese Medicine
"Genesis had a strong fourth quarter and spent this past year establishing its financial performance, putting a growth strategy into place, and expanding its marketing and sales efforts. Our product line was strengthened by the introduction of Baobaole chewable tablets, a new over the counter drug which is sold directly to pharmacies and has a high profit margin," said Mr. Wubo Cao, Chairman and CEO of Genesis Pharmaceuticals Enterprises, Inc. "We plan to build on the solid performance that we were able to achieve in fiscal year 2008."
Fourth Quarter of Fiscal Year 2008 Results
Total revenue in the fourth quarter ended June 30, 2008 was $28.3 million, up 39.0% from $20.4 million in the prior year's corresponding period. This increase in revenue was due to sales of the Company's new Baobaole chewable tablets (which were not available for sale in the prior year's corresponding period), along with sustained sales of the Company's most popular products, Clarithromycin sustained-release tablets and Itopride Hydrochloride Granules.
Gross profit in the fourth quarter ended June 30, 2008 was $23.5 million, an increase of 57.7% from $14.9 million in the prior year's corresponding period. Gross margin was 83.2%, compared to 73.3% in the prior year's corresponding period. This increase in gross profit was due to rapidly growing sales of Baobaole chewable tablets.
Selling, general and administrative expenses in the fourth quarter ended June 30, 2008 were $12.3 million, up 73.9% from $7.1 million in the prior year's corresponding period. Higher expenses in 2008 were principally because of higher commission expenses paid to sales personnel, higher advertising, marketing and promotion spending and salaries, wages and related benefits expenses, and expenses related to being a public company.
Operating income in the fourth quarter ended June 30, 2008 was $10.1 million, with an operating margin of 35.8%, a 42.2% increase from $7.1 million in the prior year's corresponding period.
Net income for the quarter ended June 30, 2008 was $9.6 million, compared to $14.6 million in the prior year's period. Net income decreased because non- operating income declined to $1.4 million in the quarter ended June 30, 2008 from $6.6 million in the prior year's corresponding period. Part of this decrease was due to a decrease in a tax exemption that declined to $5.3 million in the fourth quarter of fiscal year 2008 from $9.9 million in the prior year's corresponding quarter. Also, a non-cash debt amortization expense of approximately $2.5 million took place in the fourth quarter of 2008, for which there was no similar expense the prior year's corresponding quarter.
Full Fiscal Year Operating Highlights
Total revenue for fiscal year 2008 was $99.5 million, up 30.6% from $76.2 million in the twelve month period ended June 30, 2007. Gross profit was $77.0 million, up 40.0% from $55.0 million in the twelve month period ended June 30, 2007. Gross margin was 77.4%, up from 72.2% in the twelve month period ended June 30, 2007. Operating income totaled $32.2 million, a 75.9% increase from $18.3 million in the twelve month period ended June 30, 2007. The Company's operating margin was 32.4%, up from 24.0% in the prior year's period. Net income for fiscal year 2008 was $22.5 million, with net margin of 22.6%, a 1.8% increase from $22.1 million, with net margin of 28.9% in the twelve month period ended June 30, 2007. Net margin decreased primarily because of higher selling, general and administrative expenses as a percentage of sales and no longer having a significant tax exemption received in 2007. After giving effect to a one for forty reverse split, net income was $2.45 per basic share and $1.84 per fully diluted share in fiscal year 2008, compared to $2.94 per basic and fully diluted share in the twelve month period ended June 30, 2007.
Adjusting for a recent one for forty reverse split for its shares, there were 10,327,844 outstanding shares of common stock as of June 30, 2008. Of those shares, 560,000 shares are not considered issued and outstanding for earnings per share calculations as of at June 30, 2008 because the issuance of those shares is contingent on the occurrence of certain future events.
Financial Condition
As of June 30, 2008, the Company had $48.2 million in cash and an additional $7.8 million in restricted cash. Working capital was $73.2 million, up from $16.0 million as of June 30, 2007. This increase was primarily due to an increase in cash, investments and accounts receivable as well as decreases in short term bank loans and dividends payable. Current liabilities were $16.4 million and long-term debt consisted of $2.5 million in convertible debt. Shareholder's equity was $95.5 million. Future contractual obligations in fiscal 2009 include $8.6 million in bank indebtedness and $4.4 million in research and development contractual agreements. The Company generated $17.1 million in cash flow from operating activities in fiscal 2008. The Company invested $8.9 million in intangible assets consisting mostly of land use rights and the rights to develop, manufacture and distribute new drugs.
Recent Events
In June 2008, the Board of Directors appointed a new independent board member. The Board of Directors also established an independent Audit Committee and a Compensation Committee.
In July 2008, the Company received approval from the Chinese State Food and Drug Administration ("SFDA") to start producing and distributing Radix Isatidis Dispersible Tablets, an herbal-based traditional Chinese medicine used for viral influenza. Sales in China will begin in October.
Business Outlook and Guidance
"We are pleased to report that we recently added a new over the counter drug, Radix Isatidis Dispersible Tablets, to our product line. We began selling significant amounts of Radix Isatidis Dispersible Tablets immediately after we received our final approvals from the SFDA. We have three other drugs waiting for approval from the SFDA which we hope will be approved in fiscal year 2009 and will find similar market success. We expect sales of our current popular products to continue growing because of increased branding and greater marketing efforts," said Mr. Cao. "Throughout this last year we took a number of steps to improve our corporate governance. This included adding an independent member to our Board, adopting a code of business conduct and ethics, and establishing an audit committee and a compensation committee. These steps are a part of preparing the Company for its applying to have its shares listed on a senior securities exchange."
"Because of our strong financial performance throughout fiscal 2008 and our expectations of expanding our product line and increasing sales throughout the upcoming year, as guidance, we expect revenue for fiscal 2009 to be from $122 to $130 million, and operating income to be from $40 to $43 million. These guidance numbers are subject to change, and are based on our ability to grow our business in the future in the same way as we have in the past," concluded Mr. Cao.
Conference Call
Genesis Pharmaceuticals Enterprises, Inc. management will host a conference call at 9:00 a.m. Eastern on Wednesday, October 1, 2008 to discuss financial results for the fiscal year ended June 30, 2008. The conference call will include Mr. Wubo Cao, Chairman and Ms. Elsa Sung, CFO. To participate in this live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (888) 419-5570. International callers should call (617) 896-9871. The Conference Passcode is 375 022 62. If you are unable to participate in the call at that time, replay of the conference call will be available from Wednesday, October 1 at 11:00 a.m. Eastern until Wednesday, October 15. To access the replay, call (888) 286-8010. International callers should call (617) 801-6888. The Conference Passcode is 31221366.
About Genesis Pharmaceuticals Enterprises, Inc.
Genesis Pharmaceuticals Enterprises, Inc. is a U.S. public company engaged in the research, development, production, marketing and sales of pharmaceutical products in the People's Republic of China. Its operations are located in Northeast China in an Economic Development Zone in Laiyang City, Shandong province. Genesis is a pharmaceutical company in China producing western and Chinese herbal-based medical drugs in tablet, capsule, and granule form.
Safe Harbor Statement
Certain statements in this press release that are not historical facts are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not guarantees of future performance and are subject to risks and uncertainties that could cause the Company's actual results and financial position to differ materially from those included within the forward-looking statements. Forward-looking statements involve risks and uncertainties, including those relating to the Company's ability to introduce, manufacture and distribute new drugs. Actual results may differ materially from predicted results, and reported results should not be considered as an indication of future performance. The potential risks and uncertainties include, among others, the Company's ability to obtain raw materials needed in manufacturing, the continuing employment of key employees, the failure risks inherent in testing any new drug, the possibility that regulatory approvals may be delayed or become unavailable, patent or licensing concerns that may include litigation, direct competition from other manufacturers and product obsolescence. More information about the potential factors that could affect the Company's business and financial results is included in the Company's filings, available via the United States Securities and Exchange Commission.
CONTACT: Genesis Pharmaceuticals Enterprises, Inc., Ms. Elsa Sung CFO,
+1-954-727-8435, elsasung@jiangbo.com; or CCG Investor Relations, Inc., Mr.
Crocker Coulson, President, +1-646-213-1915, crocker.coulson@ccgir.com
Web site: http://www.genesis-china.net//
