HAIKOU CITY, China, Nov. 14, 2014 /PRNewswire-FirstCall/ -- China Pharma Holdings, Inc. (NYSE MKT: CPHI) ("China Pharma" or the "Company"), an NYSE MKT listed corporation with its fully-integrated specialty pharmaceuticals subsidiary based in China, today announced its financial results for the three months ended September 30, 2014.
Third Quarter Highlights
- In November 2014 the CFDA completed its process of the GMP certification for our new facility and issued the GMP certificate to enable us to commence manufacturing our liquid injectable and dry powder injectable product lines.
- Revenue for the three months ended September 30, 2014 was $5.5 million, a decrease of 31% from $8.1 million for the three months ended September 30, 2013.
- Losses from Natural Disaster of $2,3 million relating to a tropical typhoon during the three months ended September 30, 2014
- Operating loss for the three months ended September 30, 2014 was $6 million, compared to operating loss of $2.7 million in the same period in 2013.
- Net loss for three months ended September 30, 2014 and 2013 were $6.3 million and $2.3 million, respectively.
In November 2014, the CFDA completed its process of the GMP certification for our new facility and issued the GMP certificate to enable us to commence manufacturing our liquid injectable and dry powder injectable product lines. We have commenced the operation of the two product lines as of the date of this report.
In July 2014, a typhoon caused considerable damage to our manufacturing facilities and inventory. Part of the warehouse was flooded; some damage was caused to our new facility while the water and electricity supply was suspended for several days causing a brief halt to our production activities. We have taken emergency measures to restore and recover post-typhoon. The Company's losses from natural disaster were approximately $2.3 million (RMB14.2 million) for the nine months ended September 30, 2014. The Company received insurance compensation of $0.01 million as only the new plant building was insured and the damage to it was minor. The old plant was restored to operational mode at the end of July.
Third Quarter 2014 Results
Revenue for the three months ended September 30, 2014 was $5.5 million, a decrease of 31% from $8.1 million for the three months ended September 30, 2013. This was mainly due to the production suspension of our injectable production lines this year.
For the three months ended September 30, 2014, our cost of revenue was $4.0 million, or 73% of total revenue, which represented a decrease of $1.8 million from $5.8 million, or 72% of total revenue, in the third quarter of 2013. The decrease in cost of revenue in the third quarter of 2014 was mainly due to the decrease in purchasing prices of certain raw materials due to market fluctuations.
Gross profit for the three months ended September 30, 2014 was $1.5 million, a decrease of $0.7 million, from gross profit of $2.2 million in the same period of 2013. Our gross profit margin in the third quarter of 2014 was 27% compared to 28% in the same period of 2013. Looking forward, we expect pricing pressures on most products, while our new products have and will support the overall gross margin. For instance, Candesartan, the product we launched last November, is sold at a price that supports our gross margin
Our selling expenses for the three months ended September 30, 2014 were $0.7 million, compared to $0.9 million in the same period last year. Selling expenses accounted for 13% of the total revenue in the third quarter 2014 compared to 11% in the same period in 2013. Due to many adjustments in our selling processes under healthcare reform policies, despite the decrease in sales, we still require comparable personnel and expenses to maintain our revenue and collection of accounts receivable.
Our general and administrative expenses for the three months ended September 30, 2014 were $0.42 million, an increase of $0.05 million from $0.37 million in the same period of 2013. General and administrative expenses accounted for 8% and 5% of our total revenues in the three months ended September 30, 2014 and 2013, respectively.
Our bad debt expenses for the three months ended September 30, 2014 and 2013 were $3.9 million and $3.2 million, respectively. The increase in bad debt expenses was mainly due to the increase in the aged accounts receivable.
We suffered losses of $2.3 million relating to a tropical typhoon during the three months ended September 30, 2014, there was no comparable expense in the prior year period.
Our operating loss for the three months ended September 30, 2014 was $6 million, compared to operating loss of $2.7 million in the same period in 2013. The increase in operating loss was primarily due to the decrease in sales, the increase in bad debt expense and the losses from natural disaster recognized during the three months ended September 30, 2014.
For the three months ended September 30, 2014 and 2013, our income tax rate was 15%. Income tax expense was $0.02 million for the three months ended September 30, 2014, and income tax benefit was $0.4 million for the three months ended September 30, 2013. The income taxes recognized for the three months ended September 30, 2014 and 2013 were related to net changes in long-term deferred tax assets and liabilities. We renewed our "National High-Tech Enterprise" status ("National HT Status") from the PRC government in the third quarter of 2013. With this designation, for the years ended December 31, 2014, 2015 and 2016, we will continue to enjoy a preferential tax rate of 15% which is notably lower than the statutory income tax rate of 25%.
Net loss for three months ended September 30, 2014 and 2013 were $6.3 million and $2.3 million, respectively. The increase in net loss was primarily due to the decrease in sales, the increase in bad debt expense and the losses from natural disaster recognized for the three months ended September 30, 2014.
Nine Months Results
For the nine months ended September 30, 2014, our sales revenue decreased by $5.6 million, or 23%, to $18.8 million from $24.4 million in the corresponding period of 2013.
Gross profit for the nine months ended September 30, 2014 was $6.6 million, compared to $2.8 million in the same period of 2013. Gross profit margin for the nine months ended September 30, 2014 and 2013 were 35% and 12% respectively. Without the effect of inventory obsolescence for the nine months ended September 30, 2013, management estimates that our gross profit would have been approximately $6.5 million, and gross margin would have been 27%. The increase in gross profit margin was mainly due to market fluctuation and sales price increases in certain products; in addition, more high-margin products were sold in the first nine months of 2014 compared to the same period a year ago.
Our operating loss for the nine months ended September 30, 2014 was approximately $16.85 million, compared to $10.45 million for the same period in 2013, which represented a deterioration of $6.40 million. The deterioration in operating income performance was primarily due to lower revenue, higher bad debt and R&D expense and losses from natural disaster in the current period compared to the corresponding period one year ago.
Our net loss for the nine months ended September 30, 2014 and 2013 was $17.4 million and $9.6 million, respectively. The deterioration in net income performance was primarily due to lower revenue, higher bad debt expense, increased R&D expense and losses from natural disaster in the current period as compared to the corresponding period one year ago.
Financial Condition
Our cash and cash equivalents were $4.3 million, which represents 3% of our total assets as of September 30, 2014, as compared to $6.0 million, which represents 4% of our total assets as of December 31, 2013.
At September 30, 2014, our accounts receivable was $30.6 million, a decrease of $14.5 million from $45.1 million at December 31, 2013. The decrease was due to our enhanced collection efforts as well as the increased allowance for doubtful accounts at September 30, 2014 compared to December 31, 2013.
Net cash provided by operating activities was $2.6 million in the nine months ended September 30, 2014 compared to $3.7 million for the same period in 2013.
Conference Call
China Pharma plans to hold its third quarter 2014 earnings conference call on Friday November 14, 2014 at 8:30 a.m. ET. Listeners may access the call by dialing 1-800-742-9301or +61-283-733-610 for international callers, Conference ID#27452300 A webcast will also be available through CPHI's website at http://www.chinapharmaholdings.com. A replay of the call will be accessible through November 21, 2014 by dialing 1-855-452-5696 or +61-281-990-299 for international callers, Conference ID#27452300.
About China Pharma Holdings, Inc.
China Pharma Holdings, Inc. is a specialty pharmaceutical company that develops, manufactures and markets a diversified portfolio of products focused on conditions with a high incidence and high mortality rates in China, including cardiovascular, CNS, infectious, and digestive diseases. The Company's cost-effective, high-margin business model is driven by market demand and supported by eight scalable GMP-certified product lines covering the major dosage forms. In addition, the Company has a broad and expanding nationwide distribution network across all major cities and provinces in China. The Company's wholly-owned subsidiary, Hainan Helpson Medical & Biotechnology Co., Ltd., is located in Haikou City, Hainan Province. For more information about China Pharma Holdings, Inc., please visit http://www.chinapharmaholdings.com. The Company routinely posts important information on its website.
- FINANCIAL TABLES FOLLOW -
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CHINA PHARMA HOLDINGS, INC.
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CONDENSED CONSOLIDATED BALANCE SHEETS
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(Unaudited)
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|
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|
|
|
|
September 30,
|
|
December 31,
|
|
|
2014
|
|
2013
|
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ASSETS
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
Cash and cash equivalents
|
|
$ 4,269,037
|
|
$ 5,993,139
|
|
Banker's acceptances
|
|
116,047
|
|
336,003
|
|
Trade accounts receivable, less allowance for doubtful
|
|
|
|
|
|
accounts of $27,912,179 and $13,301,622, respectively
|
|
30,642,878
|
|
45,147,602
|
|
Other receivables, less allowance for doubtful
|
|
|
|
|
|
accounts of $70,004 and $43,064, respectively
|
|
516,095
|
|
175,739
|
|
Advances to suppliers
|
|
9,040,464
|
|
7,626,716
|
|
Inventory, less allowance for obsolescence
|
|
|
|
|
|
of $4,670,853 and $8,027,126, respectively
|
|
19,014,172
|
|
24,677,120
|
|
Total Current Assets
|
|
63,598,693
|
|
83,956,319
|
|
|
|
|
|
|
Advances for purchases of intangible assets
|
|
41,653,862
|
|
41,701,505
|
|
Property and equipment, net of accumulated depreciation of
|
|
|
|
|
|
$5,951,165 and $5,264,350, respectively
|
|
33,869,491
|
|
30,241,337
|
|
Intangible assets, net of accumulated amortization of
|
|
|
|
|
|
$4,075,696 and $3,812,992, respectively
|
|
1,410,482
|
|
1,711,793
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TOTAL ASSETS
|
|
$ 140,532,528
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|
$ 157,610,954
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|
|
|
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LIABILITIES AND STOCKHOLDERS' EQUITY
|
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|
|
|
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Current Liabilities:
|
|
|
|
|
|
Trade accounts payable
|
|
$ 3,131,988
|
|
$ 1,877,437
|
|
Accrued expenses
|
|
214,740
|
|
323,651
|
|
Other payables
|
|
1,293,273
|
|
1,312,361
|
|
Advances from customers
|
|
1,773,478
|
|
2,228,238
|
|
Other payables - related parties
|
|
1,354,567
|
|
1,354,567
|
|
Current portion of construction loan facility
|
|
1,625,118
|
|
-
|
|
Short-term notes payable
|
|
4,875,353
|
|
4,909,662
|
|
Total Current Liabilities
|
|
14,268,517
|
|
12,005,916
|
|
Non-current Liabilities:
|
|
|
|
|
|
Construction loan facility
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|
11,375,825
|
|
12,484,183
|
|
Long-term deferred tax liability
|
|
232,866
|
|
176,414
|
|
Total Liabilities
|
|
25,877,208
|
|
24,666,513
|
|
Stockholders' Equity:
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|
|
|
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Preferred stock, $0.001 par value; 5,000,000 shares authorized;
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|
|
|
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no shares issued or outstanding
|
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-
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-
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Common stock, $0.001 par value; 95,000,000 shares authorized;
|
|
|
|
|
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43,579,557 shares and 43,579,557 shares outstanding, respectively
|
|
43,580
|
|
43,580
|
|
Additional paid-in capital
|
|
23,590,204
|
|
23,590,204
|
|
Retained earnings
|
|
71,535,109
|
|
88,896,276
|
|
Accumulated other comprehensive income
|
|
19,486,427
|
|
20,414,381
|
|
Total Stockholders' Equity
|
|
114,655,320
|
|
132,944,441
|
|
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
$ 140,532,528
|
|
$ 157,610,954
|
|
CHINA PHARMA HOLDINGS, INC.
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
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AND COMPREHENSIVE INCOME (LOSS)
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(Unaudited)
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|
|
|
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For the Three Months
|
|
For the Nine Months
|
|
|
Ended September 30,
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Ended September 30,
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2014
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2013
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2014
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2013
|
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Revenue
|
|
$ 5,566,543
|
|
$ 8,116,599
|
|
$ 18,802,602
|
|
$ 24,392,311
|
|
Cost of revenue
|
|
4,057,480
|
|
5,863,587
|
|
12,215,756
|
|
17,837,989
|
|
Inventory obsolescence
|
|
-
|
|
15,747
|
|
-
|
|
3,735,820
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
1,509,063
|
|
2,237,265
|
|
6,586,846
|
|
2,818,502
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
Selling expenses
|
|
745,976
|
|
921,851
|
|
2,193,823
|
|
2,435,592
|
|
General and administrative expenses
|
|
422,729
|
|
372,568
|
|
1,229,488
|
|
1,536,831
|
|
Research and development expenses
|
|
181,796
|
|
352,599
|
|
2,528,230
|
|
1,384,263
|
|
Bad debt expense
|
|
3,940,144
|
|
3,277,780
|
|
15,280,588
|
|
7,910,583
|
|
Losses from natural disaster
|
|
2,275,593
|
|
-
|
|
2,275,593
|
|
-
|
|
Total operating expenses
|
|
7,566,238
|
|
4,924,798
|
|
23,507,722
|
|
13,267,269
|
|
|
|
|
|
|
|
|
|
|
Subsidy income
|
|
65,086
|
|
-
|
|
65,086
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|
-
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
(5,992,089)
|
|
(2,687,533)
|
|
(16,855,790)
|
|
(10,448,767)
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|
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Interest income
|
|
8,824
|
|
2,228
|
|
47,435
|
|
4,830
|
|
Interest expense
|
|
(325,244)
|
|
(89,238)
|
|
(495,054)
|
|
(263,732)
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|
Net other expense
|
|
(316,420)
|
|
(87,010)
|
|
(447,619)
|
|
(258,902)
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|
|
|
|
|
|
|
|
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Loss before income taxes
|
|
(6,308,509)
|
|
(2,774,543)
|
|
(17,303,409)
|
|
(10,707,669)
|
|
Income tax benefit (expense)
|
|
(19,215)
|
|
472,512
|
|
(57,758)
|
|
1,129,506
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|
Net loss
|
|
(6,327,724)
|
|
(2,302,031)
|
|
(17,361,167)
|
|
(9,578,163)
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|
Other comprehensive income - foreign currency
|
|
|
|
|
|
|
|
|
|
translation adjustment
|
|
33,366
|
|
880,315
|
|
(927,954)
|
|
3,918,978
|
|
Comprehensive (loss) income
|
|
$ (6,294,358)
|
|
$ (1,421,716)
|
|
$ (18,289,121)
|
|
$ (5,659,185)
|
|
Loss per share:
|
|
|
|
|
|
|
|
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Basic
|
|
$ (0.15)
|
|
$ (0.05)
|
|
$ (0.40)
|
|
$ (0.22)
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|
Diluted
|
|
$ (0.15)
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|
$ (0.05)
|
|
$ (0.40)
|
|
$ (0.22)
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CHINA PHARMA HOLDINGS, INC.
|
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
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|
(Unaudited)
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|
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For the Nine Months
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|
Ended September 30,
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|
2014
|
|
2013
|
|
Cash Flows from Operating Activities:
|
|
|
|
|
|
Net loss
|
|
$ (17,361,167)
|
|
$ (9,578,163)
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Depreciation and amortization
|
|
1,014,221
|
|
1,039,716
|
|
Bad debt expense
|
|
15,280,588
|
|
7,910,583
|
|
Deferred income taxes
|
|
57,758
|
|
(1,129,506)
|
|
Inventory obsolescence reserve
|
|
-
|
|
3,311,926
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
Trade accounts receivable
|
|
(3,029,386)
|
|
1,077,182
|
|
Other receivables
|
|
(342,012)
|
|
(452,500)
|
|
Advances to suppliers
|
|
(1,468,882)
|
|
(642,850)
|
|
Inventory
|
|
7,671,072
|
|
4,138,431
|
|
Trade accounts payable
|
|
1,338,724
|
|
376,312
|
|
Accrued taxes payable
|
|
(34,638)
|
|
(2,486,073)
|
|
Other payables and accrued expenses
|
|
(90,108)
|
|
42,847
|
|
Advances from customers
|
|
(439,740)
|
|
90,159
|
|
Net Cash Provided by Operating Activities
|
|
2,596,430
|
|
3,698,064
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
Advances for purchases of intangible assets
|
|
(244,073)
|
|
(496,634)
|
|
Purchases of property and equipment and
|
|
|
|
|
|
construction in process
|
|
(4,638,265)
|
|
(9,267,088)
|
|
Net Cash Used in Investing Activities
|
|
(4,882,338)
|
|
(9,763,722)
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
Proceeds from construction term loan
|
|
604,756
|
|
6,437,906
|
|
Net Cash Provided by Financing Activity
|
|
604,756
|
|
6,437,906
|
|
|
|
|
|
|
Effect of Exchange Rate Changes on Cash
|
|
(42,950)
|
|
103,542
|
|
Net (Decrease) Increase in Cash and Cash Equivalents
|
|
(1,724,102)
|
|
475,790
|
|
Cash and Cash Equivalents at Beginning of Period
|
|
5,993,139
|
|
4,029,708
|
|
Cash and Cash Equivalents at End of Period
|
|
$ 4,269,037
|
|
$ 4,505,498
|
|
|
|
|
|
|
Supplemental Cash Flow Information:
|
|
|
|
|
|
Cash paid for interest
|
|
$ 943,251
|
|
$ 324,117
|
|
Cash paid for income taxes
|
|
-
|
|
2,472,099
|
|
|
|
|
|
|
Supplemental Noncash Investing and Financing Activities:
|
|
|
|
|
|
Accounts payable for purchases of property and equipment
|
|
$ 69,378
|
|
$ 136,742
|
|
Accounts receivable collected with banker's acceptances
|
|
1,955,808
|
|
6,256,327
|
|
Inventory purchased with banker's acceptances
|
|
2,173,689
|
|
2,810,462
|
|
Advances for purchases of equipment paid with banker's acceptances
|
|
-
|
|
2,555,419
|
|
Advances for purchases of intangibles paid with banker's acceptances
|
|
-
|
|
715,445
|
Contact:
China Pharma Holdings, Inc.
Phone: +86-898-6681-1730 (China)
Email: hps@chinapharmaholdings.com
SOURCE China Pharma Holdings, Inc.