China Pharma Holdings, Inc. Reports Second Quarter 2017 Financial Results
HAIKOU CITY, China, Aug. 15, 2017 /PRNewswire/ -- China Pharma Holdings, Inc. (NYSE MKT: 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, 2017.
Second Quarter Highlights
-- Revenue decreased 17.7% to $2.9 million in second quarter 2017 from $3.5
million in the same period of 2016;
-- Gross profit margin was 22.2% in second quarter 2017, compared to 13.6%
in the same period of 2016.
-- Loss from operations was $2.1 million in second quarter 2017 compared to
$2.2 million in the same period of 2016, a decrease of $0.1 million in
loss;
-- Net loss was $2.3 million in second quarter 2017 compared to $2.5
million in the same period of 2016. Loss per common share was $(0.05)
per basic and diluted share in second quarter 2017 compared with $(0.06)
per basic and diluted share in the same period of 2016.
"We experienced a slight revenue decrease in the second quarter of 2017 compared to the same period last year, which was primarily due to the current status of Chinese health care reform. Recent reforms require health care institutions to strictly control 'the proportion of drug sales to total revenue', in an effort to prevent hospitals from subsidizing medical services with inflated prescription drug prices. This background led to a significant decrease of drug purchases from health care institutions and impacted our drug sales in this period," said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms. Li continued, "Nevertheless, increasing sales remains our top priority. Management will continue to vigorously promote sales by actively participating in the recent provincial market openings to receive new drug tender offers and by further exploring the basic medical market. The ongoing generic drug consistency evaluations and reform of China's drug production registration and review policies will have a major impact on the future development of our industry and may change its business patterns. We will continue to actively adapt to state policy guidance and further evaluate market conditions for our current existing products, pipeline products, and competition in the market in order to optimize our development strategy."
Second Quarter Results
Revenue decreased by 17.7% to $2.9 million for the three months ended June 30, 2017, as compared to $3.5 million for the three months ended June 30, 2016. This decrease was mainly due to the impact from the ongoing Chinese health care reform.
Gross profit for the three months ended June 30, 2017 was $0.6 million, compared to $0.5 million in the same period last year. Our gross profit margin in the three months ended June 30, 2017 was 22.2% compared to 13.6% in the same period last year. This increase was primarily due to more sales of higher margin products in this period compared to the sales performance in the same period last year.
Our selling expenses for the three months ended June 30, 2017 were $0.8 million, a decrease of $0.1 million, compared to $0.9 million for the three months ended June 30, 2016. Selling expenses accounted for 27.5% of the total revenue in the three months ended June 30, 2017 compared to 24.2% in the same period last year. Because of adjustments in our sales practices resulting from health-care reform policies, despite the overall decrease in sales, we may require additional personnel and expenses to support our sales and the collection of accounts receivable.
Our general and administrative expenses for the three months ended June 30, 2017 were $0.6 million, which represented a decrease of $0.2 million compared to $0.8 million in the same period last year. General and administrative expenses accounted for 21% and 22% of our total revenues in three months ended June 30, 2017 and 2016, respectively.
Our bad debt expenses for the three months ended June 30, 2017 was $0.4 million, compared to $0.5 million in the same period last year.
During the three months ended June 30, 2017 and 2016 the Company recognized an impairment related to "Advances for purchases of intangible assets" in the amount of $1.0 million and $0.8 million, respectively. The Company reviewed the contracts relating to advances made for purchases of intangible assets with independent laboratories and determined that the Company's advances to independent laboratories for several formulas were impaired.
Net loss for the three months ended June 30, 2017 was $2.3 million, compared to net loss of $2.5 million for the three months ended June 30, 2016.
Six Months Results
For the six months ended June 30, 2017, our sales revenue was $6.2 million, which represented a decrease of $1.0 million, or 13.7%, from the $7.2 million in the corresponding period of 2016.
Gross profit for the six months ended June 30, 2017 was $1.4 million, compared to $1.1 million in the same period of 2016. Gross profit margin for the six months ended June 30, 2017 and 2016 were 22.0% and 15.6%, respectively. The increase in gross profit margin was mainly due to more higher-margin products sold in this period.
Our operating loss for the six months ended June 30, 2017 was approximately $2.9 million, compared to $3.5 million for the same period of 2016, which represented an improvement of $0.6 million. This was mainly due to the increase in gross profit margin and decrease in bad debt expense in the first half of 2017 compared to the same period last year.
Net loss was $3.3 million, or $0.07 per basic and diluted share for the six months ended June 30, 2017, compared to $4.0 million, or $0.09 per basic and diluted share, for the same period a year ago.
Financial Condition
As of June 30, 2017, the Company had cash and cash equivalents of $1.7 million compared to $2.7 million as of December 31, 2016. Working capital decreased to $6.7 million as of June 30, 2017 from $7.1 million as of December 31, 2016; and the current ratio was 1.6 and 1.7 times at June 30, 2017 and December 31, 2016, respectively.
Our net accounts receivable balance decreased to $3.2 million as of June 30, 2017 from $4.0 million as of December 31, 2016.
Conference Call
The Company will hold a conference call at 8:30 am E.T. on August 15, 2017 to discuss the results of second quarter 2017. Listeners may access the call by dialing 1-866-519-4004 or 65-671-350-90 for international callers, Conference ID # 66755768. A replay of the call will be accessible through August 23, 2017 by dialing 1-855-452-5696 or 61-281-990-299 for international callers, Conference ID # 66755768.
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 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 & Biotechnology 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, which may include, but are not limited to, such factors as 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.
Contact:
China Pharma Holdings, Inc.
Ms. Diana Na Huang
Phone: +86-898-6681-1730 (China)
Email: hps@chinapharmaholdings.com
- FINANCIAL TABLES FOLLOW -
CHINA PHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2017 2016
---- ----
ASSETS (Unaudited) (Audited)
Current Assets:
Cash and cash equivalents $1,745,566 $2,665,802
Restricted cash 2,568,895 1,088,879
Bankers acceptance notes 16,692 -
Trade accounts receivable, less
allowance for doubtful
accounts of $16,805,221 and
$15,664,496, respectively 3,152,815 3,999,809
Other receivables, less allowance
for doubtful
accounts of $60,627 and $71,548,
respectively 217,527 224,373
Advances to suppliers 2,063,172 2,003,792
Inventory 7,258,973 7,310,939
Prepaid expenses 185,543 226,357
Total Current Assets 17,209,183 17,519,951
Advances for purchases of
intangible assets 35,381,708 35,498,059
Property, plant and equipment,
net 24,080,326 24,967,448
Intangible assets, net 453,376 534,682
TOTAL ASSETS $77,124,593 $78,520,140
=========== ===========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current Liabilities:
Trade accounts payable $2,149,331 $3,060,374
Accrued expenses 129,516 139,830
Other payables 2,294,358 2,502,694
Advances from customers 655,350 811,232
Other payables - related parties 1,354,567 1,354,567
Current portion of construction
loan facility 1,328,043 1,440,154
Banker's acceptance notes payable 2,568,895 1,088,879
Total Current Liabilities 10,480,060 10,397,730
Non-current Liabilities:
Construction loan facility 8,853,622 8,640,927
Deferred tax liability 648,103 572,349
------- -------
Total Liabilities 19,981,785 19,611,006
---------- ----------
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
Retained earnings 21,502,566 24,757,374
Accumulated other comprehensive
income 12,006,458 10,517,976
Total Stockholders' Equity 57,142,808 58,909,134
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $77,124,593 $78,520,140
=========== ===========
- -
CHINA PHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
AND COMPREHENSIVE LOSS
(Unaudited)
For the Three Months For the Six Months
Ended June 30, Ended June 30,
-------------- --------------
2017 2016 2017 2016
---- ---- ---- ----
Revenue $2,917,180 $3,542,230 $6,202,383 $7,182,724
Cost of revenue 2,268,823 3,060,133 4,836,173 6,059,808
--------- --------- --------- ---------
Gross profit 648,357 482,097 1,366,210 1,122,916
------- ------- --------- ---------
Operating expenses:
Selling expenses 803,434 857,694 1,521,071 1,826,201
General and administrative expenses 611,951 780,953 1,028,677 1,099,883
Research and development expenses 21,450 96,661 47,510 190,094
Bad debt expense 364,989 494,548 725,052 1,075,848
Impairment of long term assets 977,980 822,539 977,980 822,539
------- -------
Total operating expenses 2,779,804 3,052,395 4,300,290 5,014,565
--------- --------- --------- ---------
Subsidy income - 348,672 - 348,672
Loss from operations (2,131,447) (2,221,626) (2,934,080) (3,542,977)
---------- ---------- ---------- ----------
Other income (expense):
Interest income 16,316 33,123 21,349 66,715
Interest expense (142,205) (243,883) (281,169) (486,192)
-------- --------
Net other expense (125,889) (210,760) (259,820) (419,477)
-------- -------- -------- --------
Loss before income taxes (2,257,336) (2,432,386) (3,193,900) (3,962,454)
Income tax expense (30,574) (21,416) (60,908) (44,244)
------- ------- ------- -------
Net loss (2,287,910) (2,453,802) (3,254,808) (4,006,698)
Other comprehensive income (loss) - foreign currency
translation adjustment 1,008,890 (2,153,639) 1,488,482 (1,673,209)
---------
Comprehensive loss $(1,279,020) $(4,607,441) $(1,766,326) $(5,679,907)
=========== =========== =========== ===========
Loss per share:
Basic and Diluted $(0.05) $(0.06) $(0.07) $(0.09)
====== ====== ====== ======
Weighted average shares outstanding 43,579,557 43,579,557 43,579,557 43,579,557
========== ========== ========== ==========
CHINA PHARMA HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Six Months
Ended June 30,
--------------
2017 2016
---- ----
Cash Flows from
Operating Activities:
Net loss $(3,254,808) $(4,006,698)
Depreciation and
amortization 1,628,380 1,728,273
Bad debt expense 725,052 1,075,848
Deferred income taxes 60,908 44,244
Impairment of long-
term assets 977,980 822,539
Changes in assets and
liabilities:
Trade accounts and
other receivables (6,262) (534,417)
Advances to suppliers (9,933) (294,753)
Inventory 439,865 1,146,342
Trade accounts payable (974,197) 105,290
Accrued taxes payable (144,739) (41,984)
Other payables and
accrued expenses (87,949) (22,833)
Advances from customers (173,692) 244,323
Prepaid expenses 45,817 288,705
Net Cash (Used in)
Provided by Operating
Activities (773,578) 554,879
-------- -------
Cash Flows from
Investing Activities:
Purchases of property,
plant and equipment (51,808) (66,213)
Net Cash Used in
Investing Activities (51,808) (66,213)
------- -------
Cash Flows from
Financing Activities:
Payments of
construction term loan (145,750) (306,028)
Net Cash Used in
Financing Activity (145,750) (306,028)
-------- --------
Effect of Exchange Rate
Changes on Cash 50,900 (146,159)
------ --------
Net (Decrease) Increase
in Cash and Cash
Equivalents (920,236) 36,479
Cash and Cash
Equivalents at
Beginning of Period 2,665,802 6,248,760
Cash and Cash
Equivalents at End of
Period $1,745,566 $6,285,239
---------- ----------
Supplemental Cash Flow
Information:
Cash paid for income
taxes $ - $ -
Cash paid for interest 410,509 486,192
------- -------
Supplemental Noncash
Investing and
Financing Activities:
Accounts receivable
collected with
banker's acceptance
notes 227,274 643,457
Inventory purchased
with banker's
acceptance notes 210,787 635,806
Issuance of banker's
acceptance notes 1,435,381 1,274,293
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SOURCE China Pharma Holdings, Inc.
