China Pharma Holdings, Inc. Reports First Quarter 2019 Financial Results
HAIKOU, China, May 15, 2019 /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 March 31, 2019.
First Quarter Highlights
-- Revenue decreased 19.0% to $2.9 million in the first quarter 2019 from $3.6 million in the same period of 2018; -- Gross margin was 22.4% in the first quarter 2019, compared to 29.1% in the same period of 2018; -- Loss from operations was $0.3 million in the first quarter 2019 compared to $0.1 million in the same period of 2018, a deterioration of $0.2 million; -- Net loss was $0.4 million in the first quarter 2019 compared to $0.3 million in the same period of 2018. Loss per common share was both $0.01 per basic and diluted share in the first quarter 2019 and 2018, respectively.
In a statement from Ms. Zhilin Li, China Pharma's Chairman and CEO, "We experienced certain market fluctuations in the first quarter of 2019, which has negatively impacted our revenue in this period. Management will continue to vigorously promote sales through active participation in recent provincial market openings to solicit new drug tender offers and allow China Pharma to expand its presence in these markets." Ms. Li continued, "In addition, we continued experiencing sustained pressure from the more stringent requirements of drug registration standards, consistency evaluations, and the challenging environment in our industry in this period. 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."
First Quarter Results
Revenue decreased by 19.0% to $2.9 million for the three months ended March 31, 2019, as compared to $3.6 million for the three months ended March 31, 2018. This decrease was mainly due to market fluctuations.
Gross profit for the three months ended March 31, 2019 was $0.7 million, as compared to $1.1 million during the same period in 2018. Our gross profit margin in the three months ended March 31, 2019 was 22.4% as compared to 29.1% during the same period in 2018. The decrease in our gross profit margin was mainly due to the decrease in revenue and the increased ratio of fixed cost to revenue.
Our selling expenses for the three months ended March 31, 2019 and 2018 were $0.5 million and $0.7 million, respectively. Selling expenses accounted for 16.3% of the total revenue in the three months ended March 31, 2019, as compared to 18.8% during the same period in 2018. Because of adjustments in our sales practices, due to healthcare reform policies, we had reduced number of personnel and expenses to efficiently support our sales and the collection of accounts receivable.
Our general and administrative expenses for the three months ended March 31, 2019 were $0.4 million, which represented a decrease of $0.1 million, as compared to $0.5 million for the same period in 2018. General and administrative expenses accounted for 14.6% and 13.6% of our total revenues in the three months ended March 31, 2019 and 2018, respectively.
Net loss for the three months ended March 31, 2019 was $0.4 million, as compared to $0.3 million for the same period a year ago. The increase in net loss was mainly the result of decreased revenue, whereas the expenditures did not decrease in proportion to revenue, which was due to fixed costs. For the three months ended March 31, 2019 and 2018, loss per basic and diluted common share was both $0.01.
Financial Condition
As of March 31, 2019, the Company had cash and cash equivalents of $1.0 million compared to $1.2 million as of December 31, 2018.
As of March 31, 2019, our net accounts receivable was $0.8 million, compared to $0.9 million as of December 31, 2018.
For the three months ended March 31, 2019, cash flow from operating activities was $0.1 million, as compared to $0.5 million for the same period in 2018.
Conference Call
The Company will hold a conference call at 8:30 am E.T. on May 15, 2019 to discuss the results of the first quarter 2019. Listeners may access the call by dialing 1-866-519-4004 or 65-671-350-90 for international callers, Conference ID # 2397008. A replay of the call will be accessible through May 23, 2019 by dialing 1-855-452-5696 or 61-281-990-299 for international callers, Conference ID # 2397008.
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 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. 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) March 31, December 31, 2019 2018 ASSETS Current Assets: Cash and cash equivalents $961,277 $1,186,587 Restricted cash 976,622 1,273,940 Banker's acceptances 51,424 20,579 Trade accounts receivable, less allowance for doubtful accounts of $18,295,892 and $17,815,075, respectively 845,401 916,931 Other receivables, less allowance for doubtful accounts of $7,187 and $34,884, respectively 225,010 170,098 Advances to suppliers 108,454 47 Inventory 4,934,248 5,054,975 Prepaid expenses 118,701 123,759 Total Current Assets 8,221,137 8,746,916 Advances for purchases of intangible assets 17,490,101 17,069,587 Property and equipment, net 19,067,032 19,294,379 Operating lease right of use asset 212,587 Intangible assets, net 250,266 266,443 TOTAL ASSETS $45,241,123 $45,377,325 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Trade accounts payable $1,093,182 $1,060,934 Accrued expenses 117,241 310,804 Other payables 2,838,847 3,065,508 Advances from customers 526,247 525,647 Other payables - related parties 1,518,756 1,633,263 Operating lease liability, current portion 91,597 Current portion of construction loan facility 2,086,092 2,181,360 Bankers' acceptance notes payable 976,622 1,273,940 Total Current Liabilities 9,248,584 10,051,456 Non-current Liabilities: Construction loan facility 4,470,197 4,362,720 Operating lease liability, net of current portion 122,229 Deferred tax liability 783,204 764,374 Total Liabilities 14,624,214 15,178,550 Commitments and Contingencies (Note 13) 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 (5,688,089) (5,270,358) Accumulated other comprehensive income 12,671,214 11,835,349 Total Stockholders' Equity 30,616,909 30,198,775 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $45,241,123 $45,377,325
CHINA PHARMA HOLDINGS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) (Unaudited) For the Three Months Ended March 31, 2019 2018 Revenue $2,929,273 $3,615,684 Cost of revenue 2,272,743 2,561,984 Gross profit 656,530 1,053,700 Operating expenses: Selling expenses 478,691 678,330 General and administrative expenses 428,817 492,010 Research and development expenses 69,918 22,213 Bad debt expense 13,312 1,834 Total operating expenses 990,738 1,194,387 Loss from operations (334,208) (140,687) Other income (expense): Interest income 3,257 2,294 Interest expense (86,780) (129,102) Net other expense (83,523) (126,808) Loss before income taxes (417,731) (267,495) Income tax expense (25,985) Net loss (417,731) (293,480) Other comprehensive income - foreign currency translation adjustment 835,865 1,674,076 Comprehensive income (loss) $418,134 $1,380,596 Loss per share: Basic and diluted $(0.01) $(0.01) Weighted average shares outstanding 43,579,557 43,579,557
CHINA PHARMA HOLDINGS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Three Months Ended March 31, 2019 2018 Cash Flows from Operating Activities: Net loss $(417,731) $(293,480) Depreciation and amortization 795,483 861,430 Bad debt expense 13,312 1,834 Deferred income taxes 25,985 Non cash lease expense 1,233 Changes in assets and liabilities: Trade accounts and other receivables (145,935) (266,479) Advances to suppliers (107,839) (237,165) Inventory 389,589 427,741 Trade accounts payable 6,079 196,434 Accrued taxes payable (51,879) (163,335) Other payables and accrued expenses (387,569) (52,823) Advances from customers (12,285) 20,709 Prepaid expenses 8,065 2,888 Net Cash Provided by Operating Activities 90,523 523,739 Cash Flows from Investing Activities: Purchases of property and equipment (73,866) (3,627) Net Cash Used in Investing Activities (73,866) (3,627) Cash Flows from Financing Activities: Payments of construction term loan (148,227) (157,316) Payments of related party payables (119,561) Net Cash Used in Financing Activities (267,788) (157,316) Effect of Exchange Rate Changes on Cash 25,821 75,025 Net (Decrease) Increase in Cash and Cash Equivalents (225,310) 437,821 Cash and Cash Equivalents at Beginning of Period 1,186,587 2,030,214 Cash and Cash Equivalents at End of Period $961,277 $2,468,035 Supplemental Cash Flow Information: Cash paid for income taxes $ - $ - Cash paid for interest $80,693 $125,716 Supplemental Noncash Investing and Financing Activities: Issuance of banker's acceptances $55,603 $443,748 Accounts receivable collected with banker's acceptances 175,793 133,053 Inventory purchased with banker's acceptances 145,614 148,924 Right-of-use assets obtained in exchange for operating lease obligations 236,055
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SOURCE China Pharma Holdings, Inc.