China Pharma Holdings, Inc. Reports Second Quarter 2020 Financial Results
HAIKOU CITY, China, Aug. 14, 2020 /PRNewswire/ -- China Pharma Holdings, Inc. (NYSE American: CPHI) ("China Pharma," the "Company" or "We"), an NYSE American-listed corporation with a fully-integrated specialty pharmaceuticals subsidiary based in China, today announced financial results for the quarter ended June 30, 2020.
Second Quarter Highlights
-- Revenue increased 46.8% to $3.8 million in the second quarter 2020 from
$2.6 million in the same period of 2019;
-- Gross margin was 30.5% in the second quarter 2020, compared to 6.4% in
the same period of 2019;
-- Income from operations was $0.1 million in the second quarter 2020
compared to loss from operations of $0.8 million in the same period of
2019, an improvement of approximately $0.8 million;
-- Net income was $0.01 million in the second quarter 2020 compared to net
loss of $0.84 million in the same period of 2019. Earnings per common
stock was $0.00 per basic and diluted share in the second quarter 2020,
as compared to loss per common stock of $0.02 per basic and diluted
share in the second quarter of 2019.
-- We completed a foreign trade of COVID-19 testers in the second quarter
of 2020. This one-time business contributed approximately $1.7 million
to our revenue for the three months ended June 30, 2020.
Ms. Zhilin Li, China Pharma's Chairman and CEO, commented, "The COVID-19 outbreak continued to have a substantial negative impact on our sales of pharmaceutical products. Many people try to avoid going to the hospital for fear of cross-contamination or potential infection. However, the majority of our existing products are prescription drugs. The macro-environment has negatively impacted our drug sales in this period. Fortunately, we completed a one-time foreign trade business this quarter. Due to the continued spread of COVID-19 in the international community, COVID-19 testers have become an urgently needed product in many markets. We have actively leveraged market information as well as our expertise to complete the order in an efficient manner." Ms. Li continued, "along with the lasting efforts to place emphasis on the marketing and sales of our current exiting pharmaceutical products, we continue to explore in the field of comprehensive healthcare. Comprehensive healthcare focuses on people's daily life, aging and disease and pays attention to all kinds of risk factors and misunderstandings affecting health. We aim to leverage our expertise in the PRC for the development, manufacture and commercialization of pharmaceutical and comprehensive healthcare products for the benefit of human health."
Second Quarter Results
Revenue increased by 46.8% to $3.8 million for the three months ended June 30, 2020, as compared to $2.6 million for the three months ended June 30, 2019. This increase was mainly due to a foreign trade of COVID-19 testers we completed in the second quarter of 2020. Because of the market demand for COVID-19 related products, we received an export order for diagnostic test, which we purchased from a third party. This one-time business contributed approximately $1.7 million to our revenue for the three months ended June 30, 2020. This is a milestone of our continuous efforts to explore various niche markets, products and regions based on our experiences and abilities.
For the three months ended June 30, 2020, our cost of revenue was $2.6 million, or 70% of total revenue, comparing to $2.4 million, or 94% of total revenue, for the same period in 2019. The decrease in cost of revenue was mainly due to a foreign trade of COVID-19 testers we completed in the second quarter of 2020.
Gross profit for the three months ended June 30, 2020 was $1.1 million, as compared to $0.2 million during the same period in 2019. Our gross profit margin in the three months ended June 30, 2020 was 30.5% as compared to 6.4% during the same period in 2019. The increase in our gross profit margin was mainly due to a foreign trade of COVID-19 testers we completed in the second quarter of 2020.
Our selling expenses for the three months ended June 30, 2020 and 2019 were $0.7 million and $0.5 million, respectively. Selling expenses accounted for 19.3% of the total revenue in the three months ended June 30, 2020, as compared to 19.7% during the same period in 2019. Because of adjustments in our sales practices, and reform of healthcare policies, we reduced number of personnel and expenses to efficiently support our sales and the collection of accounts receivable.
Our general and administrative expenses were both $0.3 million for the three months ended June 30, 2020 and 2019, respectively. General and administrative expenses accounted for 8.6% and 13.0% of our total revenues in the three months ended June 30, 2020 and 2019, respectively.
Our operating income for the three months ended June 30, 2020 was $0.1 million, compared to an operating loss of $0.8 million during the same period in 2019.
Net income for the three months ended June 30, 2020 was $0.01 million, or $0.00 per basic and diluted common share, as compared to net loss of $0.84 million, or $0.02 per basic and diluted common share for the same period a year ago. The decrease in net loss was mainly the result of a foreign trade of COVID-19 testers we completed in the second quarter of 2020.
Six Months Results
Revenue was both $5.5 million for the six months ended June 30, 2020 and 2019, respectively. The first three months in this year was impacted by COVID-19 outbreak in China, however there was one-time revenue from the selling of COVID-19 testers around $1.7 million, leading the revenue back to prior year performance.
Gross profit for the six months ended June 30, 2020 was $1.3 million, compared to $0.8 million in the same period in 2019. Our gross profit margin in the six months ended June 30, 2020 was 24.3% compared to 14.9% in the same period in 2019. The increase in our gross profit margin was mainly due to a foreign trade of COVID-19 testers we completed in the second quarter of 2020.
Net loss for the six months ended June 30, 2020 was $0.6 million, as compared to net loss of $1.3 million for the six months ended June 30, 2019. The decrease of net loss was mainly due to a foreign trade of COVID-19 testers we completed in the second quarter of 2020.
Financial Condition
As of June 30, 2020, the Company had cash and cash equivalents of $1.8 million compared to $1.1 million as of December 31, 2019.
Our net accounts receivable was both $0.6 million as of June 30, 2020 and December 31, 2019, respectively.
For the six months ended June 30, 2020, cash flow used in operating activities was $0.2 million, as compared to cash flow provided by operating activities of $0.2 million for the same period in 2019.
Conference Call
The Company will hold a conference call at 8:30 am E.T. on August 14, 2020 to discuss the results of the second quarter of 2020. Listeners may access the call by registering via the link below:
http://apac.directeventreg.com/registration/event/7427437
A replay of the call will be accessible through August 22, 2020 by dialing 1-855-452-5696 or 61-281-990-299 for international callers, Conference ID # 7427437.
About China Pharma Holdings, Inc.
China Pharma Holdings, Inc. is a specialty pharmaceutical company that develops, manufactures and markets a diversified portfolio of products, focusing on conditions with high incidence and high mortality rates in China, including cardiovascular, CNS, infectious, and digestive diseases. The Company's cost-effective business model is driven by market demand and supported by new 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 & Biotechnique Co., Ltd., is located in Haikou City, Hainan Province. For more information about China Pharma Holdings, Inc., please visit www.chinapharmaholdings.com. The Company routinely posts important information on its website.
Safe Harbor Statement
Certain statements in this press 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. Such risks and uncertainties may include, but are not limited to: the achievability of financial guidance; success of new product development; unanticipated changes in product demand; increased competition; downturns in the Chinese economy; uncompetitive levels of research and development; 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, except as required by applicable law or regulation.
- FINANCIAL TABLES FOLLOW -
CHINA PHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
June 30,
December 31,
2020 2019
ASSETS
Current Assets:
Cash and cash equivalents $1,813,544 $1,074,979
Restricted cash 222,996 109,908
Banker's acceptances 11,251 45,756
Trade accounts receivable, less allowance for doubtful
accounts of $17,342,097 and $17,575,100, respectively 595,733 635,371
Other receivables, less allowance for doubtful
accounts of $23,715 and $22,729, respectively 86,065 46,643
Advances to suppliers 277,900 404
Inventory 3,852,972 3,588,824
Prepaid expenses 397,374 77,120
Total Current Assets 7,257,835 5,579,005
Property, plant and equipment, net 15,631,653 16,313,827
Operating lease right of use asset 90,289 136,779
Intangible assets, net 185,244 205,611
TOTAL ASSETS $23,165,021 $22,235,222
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable $1,025,098 $1,366,330
Accrued expenses 180,719 189,880
Other payables 3,753,356 3,560,332
Advances from customers 592,961 505,398
Other payables - related parties 2,152,161 2,071,986
Operating lease liability, current portion 93,510 91,306
Current portion of construction loan facility 2,118,794 2,150,168
Current portion of lines of credit 1,200,650
Bankers' acceptance notes payable 222,996 109,908
Total Current Liabilities 11,340,245 10,045,308
Non-current Liabilities:
Construction loan facility 1,977,541 2,150,168
Lines of credit, net of current portion 706,264
Operating lease liability, net of current portion 48,701
Deferred tax liability 742,450 753,444
Total Liabilities 14,766,500 12,997,621
Commitments and Contingencies (Note 14)
Stockholders' Equity:
Preferred stock, $0.001 par value; 5,000,000 shares authorized;
no shares issued or outstanding
Common stock, $0.001 par value; 95,000,000 shares authorized;
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
Accumulated deficit (26,620,246) (25,972,402)
Accumulated other comprehensive income 11,384,983 11,576,219
Total Stockholders' Equity 8,398,521 9,237,601
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $23,165,021 $22,235,222
CHINA PHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
For the Three Months For the Six Months
Ended June 30,
Ended June 30,
2020 2019 2020 2019
Revenue $3,770,723 $2,569,408 $5,534,678 $5,498,681
Cost of revenue 2,620,925 2,405,860 4,190,441 4,678,603
Gross profit 1,149,798 163,548 1,344,237 820,078
Operating expenses:
Selling expenses 727,642 505,866 1,053,737 984,557
General and administrative expenses 322,445 334,550 711,004 763,367
Research and development expenses 30,044 66,008 78,863 135,926
Bad debt (benefit) expense (5,318) 10,092 24,928 23,404
Total operating expenses 1,074,813 916,516 1,868,532 1,907,254
Income (loss) from operations 74,985 (752,968) (524,295) (1,087,176)
Other income (expense):
Interest income 1,212 12,119 1,598 15,376
Interest expense (63,144) (97,254) (125,147) (184,034)
Net other expense (61,932) (85,135) (123,549) (168,658)
Income (loss) before income taxes 13,053 (838,103) (647,844) (1,255,834)
Income tax expense
Net income (loss) 13,053 (838,103) (647,844) (1,255,834)
Other comprehensive income - foreign currency
translation adjustment 5,796 (811,164) (191,236) 24,701
Comprehensive income (loss) $18,849 $(1,649,267) $(839,080) $(1,231,133)
Earnings (loss) per share:
Basic and diluted $0.00 $(0.02) $(0.01) $(0.03)
Weighted average shares outstanding 43,579,557 43,579,557 43,579,557 43,579,557
CHINA PHARMA HOLDINGS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months
Ended June 30,
2020 2019
Cash Flows from Operating Activities:
Net loss $(647,844) $(1,255,834)
Depreciation and amortization 1,305,070 1,575,870
Bad debt expense 24,928 23,404
Inventory write off 111,533
Changes in assets and liabilities:
Trade accounts and other receivables (305,183) (284,126)
Advances to suppliers (279,380) (10,615)
Inventory (14,136) 960,946
Trade accounts payable (323,470) 223,562
Accrued taxes payable 279,748 (43,632)
Other payables and accrued expenses (79,967) (369,547)
Change in bankers' acceptance notes payable 115,468 (781,626)
Advances from customers 95,579 31,548
Prepaid expenses (323,553) (31,309)
Net Cash (Used in) Provided by Operating Activities (152,740) 150,174
Cash Flows from Investing Activities:
Purchases of property and equipment (840,449) (73,538)
Net Cash Used in Investing Activities (840,449) (73,538)
Cash Flows from Financing Activities:
Proceeds from lines of credit 1,919,818
Payments of construction term loan (142,209) (147,475)
Proceeds (payments) of related party payables 90,551 (231,252)
Net Cash Provided by) Used in Financing Activities 1,868,160 (378,727)
Effect of Exchange Rate Changes on Cash (23,318) 768
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash 851,653 (301,323)
Cash, Cash Equivalents and Restricted Cash at Beginning of Period 1,184,887 2,460,527
Cash, Cash Equivalents and Restricted Cash at End of Period $2,036,540 $2,159,204
Cash and Cash Equivalents 1,813,544 1,655,892
Restricted cash 222,996 503,312
Cash, Cash Equivalents and Restricted Cash at End of Period $2,036,540 $2,159,204
Supplemental Cash Flow Information:
Cash paid for income taxes
$ -
$ -
Cash paid for interest $118,374 $178,991
Supplemental Noncash Investing and Financing Activities:
Issuance of banker's acceptances
$ -
$ -
Accounts receivable collected with banker's acceptances 270,453 378,585
Inventory purchased with banker's acceptances 304,520 399,455
Right-of-use assets obtained in exchange for operating lease obligations 233,629
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SOURCE China Pharma Holdings, Inc.
