HAIKOU CITY, China, Aug. 15, 2014 /PRNewswire/ -- 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 June 30, 2014.
Second Quarter Highlights
"We have submitted the application for a new GMP certificate at the end of June 2014. We believe that the GMP upgrading will be successful and expect the new GMP certificate to be issued in approximately three to six months from our submission of the application," said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms. Li continued, "The national CFDA staff was originally scheduled for an on-site-review of our new facility and production lines in late July of 2014. The review is a mandatory and major step in order for us to receive the new GMP certification. However, due to a once-in-forty-year 16 grade super typhoon Rammasun hitting Haikou on July 18, 2014, the on-site-review was postponed and the typhoon caused considerable damage to our manufacturing facilities and inventory. We have taken emergency measures to restore and recover post-typhoon to be ready for the rescheduled on-site-review in mid-August."
Second Quarter 2014 ResultsRevenue decreased by 24% to $6.1 million for the three months ended June 30, 2014, as compared to $8.0 million for the three months ended June 30, 2013, due to the suspension of our injectable production lines this year.
Our cost of revenue was $3.7 million, or 61% of total revenue in the second quarter of 2014, which represented a decrease of $2.1 million from $5.8 million, or 73% of total revenue, in the second quarter of 2013. The decrease in cost of revenue was mainly due to a decrease in purchasing prices of certain raw materials result from market fluctuation.
Gross profit was $2.4 million in the second quarter of 2014, an increase of $0.3 million, from $2.2 million in the same period of 2013. Our gross profit margin in the second quarter of 2014 was 39% compared to 27% in the same period 2013. The increase in gross profit margin was mainly due to the decrease in purchasing prices of certain raw materials and the increase in selling prices of certain products result from market fluctuation.
Selling, general and administrative expenses were $1.0 million, or 16% of sales in the second quarter of 2014, compared to $1.3 million, or 16% of sales, in the same period in 2013. The Company's research and development expense was $1.9 million in the second quarter of 2014, compared to $0.9 million in the same period last year. The increase in R&D expense was mainly due to the costs related to testing of the new production lines and the payment schedule per milestone stated in the contracts.
Our bad debt expenses were $8.0 million in the second quarter of 2014, compared to $4.8 million in the same period in 2013. The increase in bad debt expenses was mainly due to the increase in the aged accounts receivable.
Our operating loss was $8.5 million in the second quarter of 2014, compared to $4.8 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 R&D expense recognized during the three months ended June 30, 2014.
For the three months ended June 30, 2014 and 2013, our income tax rate was 15%. Income tax expense was $0.02 million for the three months ended June 30, 2014, and income tax benefit was $0.4 million for the three months ended June 30, 2013. The income taxes recognized for the three months ended June 30, 2014 and 2013 were related to changes in 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 ending 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 was $8.6 million or $0.20 per basic and diluted share in the second quarter of 2014, compared to $4.5 million, or $0.10 per basic and diluted share in the same period in 2013. The increase in net loss was primarily due to the decrease in sales, the increase in bad debt expense and R&D expense recognized for the three months ended June 30, 2014.
Six Months ResultsRevenue for the six months ended June 30, 2014 was $13.2 million, down 19% from revenue of $16.3 million for the six months ended June 30, 2013.
Gross profit for the six months ended June 30, 2014 was $5.1 million for the six months ended June 30, 2014, compared to $0.6 million for the corresponding period of 2013. Gross profit for the six months ended June 30, 2013 was impacted by an inventory obsolescence amount of $3.7 million during that period.
Operating loss was $10.9 million for the six months ended June 30, 2014, decreased by $3.1 million from $7.8 million for the same period of 2013.
Net loss was $11.0 million, or $0.25 per basic and diluted share for the six months ended June 30, 2014, compared to $4.2 million, or $0.17 per basic and diluted share, for the same period a year ago.
Financial ConditionAs of June 30, 2014, the Company had cash and cash equivalents of $4.4 million compared to $6.0 million as of December 31, 2013. Working capital decreased to $57.1 million as of June 30, 2014 from $72.0 million as of December 31, 2013 and the current ratio was 5.8 times as of June 30, 2014 compared to 7.0 times as of December 31, 2013.
Our accounts receivable balance decreased to $35.9 million at June 30, 2014 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 June 30, 2014 compared to December 31, 2013.
For the three months ended June 30, 2014, cash flow from operating activities was $2.4 million, as compared to $3.1 million in the same period in 2013.
Conference CallThe Company will hold a conference call at 8:30 am ET on August 15, 2014 to discuss its second quarter 2014 results. Listeners may access the call by dialing 1-866-519-4004 or 65-672-393-81 for international callers, Conference ID # 81036556. A webcast will also be available through CPHI's website at http://www.chinapharmaholdings.com. A replay of the call will be accessible until August 23, 2014 by dialing 1-855-452-5696 or 61-281-990-299 for international callers, Conference ID # 81036556.
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.
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.
China Pharma Holdings, Inc.
Phone: +86-898-6681-1730 (China)
Email: firstname.lastname@example.org - FINANCIAL TABLES FOLLOW - CHINA PHARMA HOLDINGS, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(Unaudited)June 30,December 31,20142013ASSETSCurrent Assets:Cash and cash equivalents$
5,993,139Banker's acceptances92,832336,003Trade accounts receivable, less allowance for doubtfulaccounts of $24,499,361 and $13,301,622, respectively35,904,93445,147,602Other receivables, less allowance for doubtfulaccounts of $60,083 and $43,064, respectively482,862175,739Advances to suppliers7,142,2907,626,716Inventory, less allowance for obsolescence of $7,968,701 and $8,027,126, respectively20,960,89424,677,120Total Current Assets69,009,55683,956,319Advances for purchases of intangible assets41,397,98441,701,505Property and equipment, net of accumulated depreciation of$5,628,507 and $5,264,350, respectively34,115,61830,241,337Intangible assets, net of accumulated amortization of$3,978,083 and $3,812,992, respectively1,506,4901,711,793TOTAL ASSETS$ 146,029,648$ 157,610,954LIABILITIES AND STOCKHOLDERS' EQUITYCurrent Liabilities:Trade accounts payable$
,877,437Accrued expenses293,539323,651Other payables1,179,7201,312,361Advances from customers1,626,3342,228,238Other payables - related parties1,354,5671,354,567Short-term notes payable4,873,9284,909,662Total Current Liabilities11,869,25412,005,916Non-current Liabilities:Construction loan facility12,997,14112,484,183Long-term deferred tax liability213,575176,414Total Liabilities25,079,97024,666,513Stockholders' Equity:Preferred stock, $0.001 par value; 5,000,000 shares authorized;no shares issued or outstanding--Common stock, $0.001 par value; 95,000,000 shares authorized;43,579,557 shares and 43,579,557 shares outstanding, respectively43,58043,580Additional paid-in capital23,590,20423,590,204Retained earnings77,862,83388,896,276Accumulated other comprehensive income19,453,06120,414,381Total Stockholders' Equity120,949,678132,944,441TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$ 146,029,648$ 157,610,954CHINA PHARMA HOLDINGS, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONSAND COMPREHENSIVE INCOME (LOSS)(Unaudited)For the Three MonthsFor the Six MonthsEnded June 30,Ended June 30,2014201320142013Revenue$
,275,712Cost of revenue3,713,1475,849,0028,158,27611,974,402Inventory obsolescence-27,178-3,720,073Gross profit2,417,3972,150,1455,077,783581,237Operating expenses:Selling expenses627,442701,6871,447,8471,513,741General and administrative expenses382,832591,251806,7591,164,263Research and development expenses1,902,027865,2492,346,4341,031,664Bad debt expense8,032,3154,752,73311,340,4444,632,803Total operating expenses10,944,6166,910,92015,941,4848,342,471(Loss) income from operations(8,527,219)(4,760,775)(10,863,701)(7,761,234)Other income (expense):Interest income16,8281,01638,6112,602Interest expense(113,363)(92,049)(169,810)(174,494)Net other income (expense)(96,535)(91,033)(131,199)(171,892)(Loss) income before income taxes(8,623,754)(4,851,808)(10,994,900)(7,933,126)Income tax benefit (expense)(19,196)387,983(38,543)656,994Net (loss) income(8,642,950)(4,463,825)(11,033,443)(7,276,132)Other comprehensive income - foreign currencytranslation adjustment153,6642,218,896(961,320)3,038,663Comprehensive (loss) income$
(4,237,469)(Loss) earnings per share:Basic$
(0.17) CHINA PHARMA HOLDINGS, INC.CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)For the Six MonthsEnded June 30,20142013Cash Flows from Operating Activities:Net loss$ (11,033,443)$
(7,276,132)Depreciation and amortization596,819697,549Bad debt expense11,340,4444,632,803Deferred income taxes38,543(656,994)Inventory obsolescence reserve-3,720,073Changes in assets and liabilities:Trade accounts receivable(3,398,497)1,672,236Other receivables(309,181)(468,509)Advances to suppliers429,998(648,436)Inventory4,781,5011,745,256Trade accounts payable714,3801,403,638Accrued taxes payable(35,513)(1,767,344)Other payables and accrued expenses(124,072)(15,103)Advances from customers(587,165)19,003Net Cash Provided by Operating Activities2,413,8143,058,040Cash Flows from Investing Activities:Advances for purchases of intangible assets-(4,572,982)Purchases of property and equipment andconstruction in process(4,543,490)(49,030)Net Cash Used in Investing Activities(4,543,490)(4,622,012)Cash Flows from Financing Activities:Proceeds from construction term loan605,347-Net Cash Provided by Financing Activity605,347-Effect of Exchange Rate Changes on Cash(43,066)58,787Net (Decrease) Increase in Cash and Cash Equivalents(1,567,395)(1,505,185)Cash and Cash Equivalents at Beginning of Period5,993,1394,029,708Cash and Cash Equivalents at End of Period$
2,524,523Supplemental Cash Flow Information:Cash paid for interest$
7,819Cash paid for income taxes-1,716,064Supplemental Noncash Investing and Financing Activities:Accounts payable for purchases of property and equipment$
53,621Accounts receivable collected with banker's acceptances994,6245,756,309Inventory purchased with banker's acceptances1,235,9562,099,243Advances for purchases of equipment paid with banker's acceptances-2,063,840
|SOURCE China Pharma Holdings, Inc.|
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