CHANGCHUN, China and LOS ANGELES, Oct. 14 /PRNewswire-Asia/ -- China Yongxin Pharmaceuticals, Inc. (OTC Bulletin Board: CYXN; "China Yongxin Pharmaceuticals" or "the Company"), a leading manufacturer, distributor and retailer of pharmaceuticals in Northeastern China, today announced its unaudited financial results for the second quarter of 2009 which ended June 30, 2009.
Revenues for the second quarter of 2009 were essentially flat at approximately $14.6 million compared to the second quarter of 2008, with a marginal increase due to an increase in revenue from its retail drug stores offset by a decrease in volume from its pharmaceutical wholesale business. Revenues from retail drug stores were $6.0 million, compared to $5.8 million for the same period in 2008, which included a 10.9% increase for existing same store sales. A broader product portfolio, in addition to increased marketing activities, contributed to the growth. During the quarter, the Company launched one new chain drug store in Tianjin.
"We believe our business during the first half of 2009 was impacted by customers waiting for specifics on the new healthcare reform plan. On August 18 the Chinese government issued China's Essential Drug List (EDL) which included 307 commonly used pharmaceuticals. These will be subsidized by the government to provide easier access to all citizens. China Yongxin distributes 295 products included on this list and we believe our Company will benefit from the government's efforts to boost domestic spending, in addition to the new healthcare reform which is gaining momentum," commented Mr. Yongxin Liu, Chairman and Chief Executive Officer of China Yongxin. "We have added 12 high margin pharmaceutical products with exclusive distribution rights in Jilin province in the first half of 2009 and we expect this to drive market share gains and growth during the balance of this year."
Cost of goods sold for the second quarter was approximately $11.9 million, yielding a gross profit of $2.7 million and gross margins of 18.6%, compared to $2.9 million in gross profit and a gross margin of 19.6% during the second quarter of 2008. The slight decrease in gross margins was primarily attributable to the slight increase in cost of goods sold.
Operating expenses for the three months ended June 30, 2009, were $1.5 million, compared to approximately $1.6 million in the same period in 2008. Selling expenses for the period decreased marginally to $0.2 million from the year ago period. The Company prudently managed utilities usage, transportation costs and sales people to effectively reduce selling expenses and maintain gross profit. General and administration expenses for the three months ended June 30, 2009 increased approximately 30.7% to $0.8 million, compared to $0.6 million in the same year ago period, with the majority of the increase related to auditing expenses.
Operating income for the second quarter of 2009 totaled approximately $1.2 million, a 9.0% decrease from the $1.3 million reported for the second quarter of 2008. Operating margins were 8.1% and 9.0% for the second quarter of 2009 and 2008, respectively.
For the second quarter of 2009, net income was approximately $1.0 million, a 44.8% increase from the $0.7 million reported during the second quarter of 2008. The increase was primarily related to the absence of a $0.2 million interest expense which occurred during the second quarter of 2008. Diluted earnings per share were $0.03 compared to $0.02 for the second quarter of 2009 and 2008 respectively, based upon 32.0 million and 32.1 million shares. The income tax was $0.5 million compared to $0.6 million in the second quarter of 2008 with an effective tax rate of 28.2% in the second quarter.
For the six months ended June 30, 2009, revenues decreased approximately 19.4% to $23.8 million compared to the same period in 2008. Gross profit was $4.9 million for the first six months of 2009, representing a decrease of 8.1% from the first six months of 2008. Gross margins were 20.8% for the first six months of 2009 compared to 18.2% for the same period in 2008.
Income from operations was $1.8 million for the first six months of 2009, representing a decrease of 27.6% over the first six months of 2008. Operating margins were 7.7% for the first six months of 2009 compared to 8.6% for the first six months of 2008. Net income decreased marginally to $1.5 million for the six months ended June 30, 2009 compared to the same period in 2008. Diluted earnings per share were $0.05 compared to $0.05 for the first six months of fiscal 2009 and 2008 respectively, based upon 32.0 million and 32.1 million shares.
Balance Sheet and Cash Flow
Cash and cash equivalents totaled $1.6 million on June 30, 2009, compared to $0.6 million on December 31, 2008, while the Company maintained a short-term loan payable of $2.2 million. Accounts receivable grew 17.2% to $7.1 million from $6.0 million on December 31, 2008. Days sales outstanding stood at 43 compared to 37 in the second quarter of last year. The Company had a current ratio of 1.8 to 1 on June 30, 2009 and stockholders' equity of $19.7 million. For the first six months of 2009, the Company generated $1.0 million in cash from operations versus $2.0 million for the same period in 2008.
On March 9, 2009, China Yongxin formally launched its Electronic Diagnosis System. To date the Company has installed 20 systems in Yongxin chain drugstores, all located in Changchun, Jilin. The System enables its customers to remotely receive a medical diagnosis and conveniently purchase prescription drugs at the store. The Company is always working to improve the level of service it offers, and leverage its large and growing base of "Member" customers who are entitled to discounts, rebates and special offers. This strategy, in addition to selling a broader array of higher margin health, beauty and cosmetics products, has increased customer retention and improved revenue and profitability in this business segment.
Since the beginning of 2009, China Yongxin has signed 12 exclusive distribution agreements for Jilin province with several well-known Pharmaceutical Manufacturers including Tianjin Smith Kline & French Laboratones Ltd. As of June 30, 2009, China Yongxin has approximately 216 drugs with exclusive distribution rights in Jilin province. This portfolio is a key component of its long-term growth strategy to leverage the large distribution center and channels established to drive incremental future revenue growth. These agreements are typically one year in duration and renewable.
China Yongxin recently secured loans from local banks and rural credit unions totaling $2.9 million with terms ranging from 1 to 3 years and are renewable after the initial terms. These funds will be utilized to provide working capital for the Company's distribution segment as it capitalizes on new organic growth opportunities supported by the government's new healthcare initiative.
"With enhanced government support, specifically the commencement of China's $126 billion health care reform plan focused on providing a broader spectrum of healthcare services and pharmaceutical products to all Chinese residents, we are confident that our modernized logistic center and distribution channels, broad customer base of chain drugstores, extensive product portfolio, and committed management team will enable us to resume our growth momentum and capitalize on a long-term, secular growth opportunity," concluded Mr. Liu.
About China Yongxin Pharmaceuticals, Inc.
China Yongxin Pharmaceuticals, Inc. was founded in 1993 as the Changchun Yongxin Dirui Medical Co., Ltd. (Yongxin), a wholesale drug distributor. Its products include Chinese traditional medicines, pharmaceutical preparations, natural health products, health food, cosmetics, and medical equipment. It began retail operations in 2004, and in 2005, it gained franchise rights from one of the world's largest drug chains for China's Jilin Province. By the end of 2007, the Company had become one of the fastest growing pharmaceutical companies in China through its retail chain of 93 drug outlets as well as wholesale distribution and manufacturing operations in Northeastern China. For more information about China Yongxin Pharmaceuticals, please visit http://www.yongxinchina.com .
This news release contains certain "forward-looking statements." Forward-looking statements are based on current expectations and assumptions and are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, and many of which are beyond the Company's control. The forward-looking statements are also identified through the use of words "believe," enable," "may," "will," "could," "intends," "estimate," "anticipate," "plan," "predict" "probable," "potential," "possible," "should," "continue," and other words of similar meaning. Actual results could differ materially from these forward-looking statements as a result of a number of risk factors detailed in the Company's periodic reports filed with the SEC. Given these risks and uncertainties, investors are cautioned not to place undue reliance on such forward-looking statements and no assurances can be given that such statements will be achieved. China Yongxin Pharmaceutical Inc. does not assume any duty to publicly update or revise the material contained herein.
For more information, please contact: For the Company: Mr. Sam Liu, COO China Yongxin Pharmaceuticals, Inc. Tel: +1-626-581-9098 Email: firstname.lastname@example.org Investors: Mr. Matthew Hayden, HC International Tel: +1-561-245-5155 Email: email@example.com Web: http://www.hcinternational.net CHINA YONGXIN PHARMACEUTICALS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 2009 AND DECEMBER 31, 2008 (UNAUDITED) June 30, 2009 December 31, 2008 ASSETS Current Assets: Cash and cash equivalents $1,620,168 $609,422 Accounts receivable, net 7,070,275 6,030,874 Notes receivable 1,561,462 1,334,078 Other receivable, net 552,549 356,573 Advances to suppliers 8,465,678 6,186,269 Prepaid expenses 245,832 345,686 Inventory, net 7,923,325 7,864,677 Current assets of the discontinued operations 46 46 Total Current Assets 27,439,336 22,727,625 Property and Equipment, net 2,512,538 2,680,207 Construction In Progress 6,357,179 6,066,249 Intangible Assets, net 60,428 73,687 Total Assets $36,369,481 $31,547,768 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities: Accounts payable $5,944,014 $3,255,148 Accrued expenses & other payable 2,694,603 2,447,067 Advances from customers 1,570,322 2,580,894 Taxes payable 1,944,665 1,240,411 Loans to related parties 184,662 184,662 Short-term loans payable 2,221,276 1,967,185 Deferred income 186,861 273,753 Current liabilities of the discontinued operations 628,883 628,883 Total Current Liabilities 15,375,288 12,578,003 Long term loan 1,318,500 1,320,390 Commitments and Contingency -- -- Stockholders' Equity: Preferred stock, $0.001 par value; 5,000,000 shares authorized; 5,000,000 shares issued and outstanding 5,000 5,000 Common stock; $0.001 par value; 75,000,000 shares authorized; 31,510,540 shares issued and outstanding as of June 30, 2009 and 31,400,540 shares issued and outstanding as of December 31, 2008 31,621 31,401 Additional paid in capital 635,487 615,906 Deferred consulting expense - issuance of warrants -- (72,815) Prepaid consulting - issuance of shares -- (68,750) Receivable from a related party (50,000) (50,000) Statutory reserve 2,050,992 1,841,241 Other comprehensive income 1,660,196 1,684,649 Retained earnings 10,818,845 9,563,803 Non-controlling interest 4,523,552 4,098,940 Total Stockholders' Equity 19,675,693 17,649,375 Total Liabilities and Stockholders' Equity $36,369,481 $31,547,768 CHINA YONGXIN PHARMACEUTICALS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE-MONTH AND SIX-MONTH PERIODS ENDED JUNE 30, 2009 AND 2008 (UNAUDITED) For the Three-Month For the Six-Month Period Period Ended June 30, Ended June 30, 2009 2008 2009 2008 Net Revenues $14,638,615 $14,580,500 $23,823,609 $29,574,097 Cost of Goods Sold (11,920,027) (11,723,541) (18,874,297) (24,190,231) Gross profit 2,718,588 2,856,959 4,949,312 5,383,866 Operating Expenses: Selling expenses 763,290 963,352 1,583,452 1,724,373 General and administrative expenses 767,160 587,915 1,521,874 1,113,315 Total operating expenses 1,530,449 1,551,267 3,105,325 2,837,688 Income From Operations 1,188,139 1,305,692 1,843,986 2,546,178 Other Income (Expense): Other income 706,758 600,205 794,555 834,140 Other expense (47,160) 103,634 (20,783) (34,906) Interest income (expense) 16,458 (225,005) 7,984 (227,112) Total other income 676,057 478,834 781,757 572,122 Operating Income Before Income Tax and Non controlling Interest 1,864,196 1,784,526 2,625,743 3,118,300 Provision for income tax (525,801) (565,227) (730,566) (940,142) Net Income Before Non controlling Interest 1,338,394 1,219,299 1,895,177 2,178,158 Non controlling interest (297,801) (500,378) (430,386) (691,881) Net Income 1,040,594 718,921 1,464,791 1,486,277 Other Comprehensive Item: Foreign exchange translation gain (42,017) 294,872 (18,340) 836,712 Net Comprehensive Income 998,577 1,013,793 1,446,451 2,322,989 Earning per share Basic $0.03 $0.02 $0.05 $0.05 Diluted $0.03 $0.02 $0.05 $0.05 Weighted average number of shares outstanding Basic 31,148,219 31,116,845 31,095,623 31,079,138 Diluted 32,048,219 32,144,356 31,995,623 32,106,649 CHINA YONGXIN PHARMACEUTICALS INC. CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2009 AND 2008 (UNAUDITED) 2009 2008 CASH FLOWS FROM OPERATING ACTIVITIES Net Income attributable to the company $1,464,791 $1,486,277 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 152,845 167,869 Stocks and warrants issued or to be issued for services 61,750 141,566 Amortization of prepaid & deferred consulting cost 141,565 Non-controlling interest 430,386 691,881 (Increase) / decrease in current assets: Accounts receivable (1,048,523) (3,183,428) Notes receivable (229,403) -- Other receivable (196,580) (799,159) Advances to suppliers (2,289,358) 2,077,575 Prepaid expenses 99,406 (70,437) Inventory (69,939) (1,556,377) Increase / (decrease) in current liabilities: Accounts payable 1,768,564 1,342,605 Notes payable 552,449 -- Other payable 677,711 2,571 Accrued expense (107,245) -- Tax payable 706,368 857,194 Advances from customers (1,007,358) 1,047,628 Deferred revenue (86,541) (249,545) Net cash provided by operating activities 1,020,888 1,956,221 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from minority interest shareholders -- 11,406 Additions to construction in progress (275,529) -- Purchase of property, equipment and intangible assets -- (2,626,220) Net cash used in investing activities (275,529) (2,614,813) CASH FLOWS FROM FINANCING ACTIVITIES Receipt of short term loan -- 1,964,749 Receipts of loan from non-related parties 256,843 -- Receipts of Loan from related parties -- (1,620,887) Net cash provided by financing activities 256,843 343,863 NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 1,002,201 (314,730) EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 8,545 225,092 CASH AND CASH EQUIVALENTS, BEGINNING BALANCE 609,422 1,180,029 CASH AND CASH EQUIVALENTS, ENDING BALANCE $1,620,168 $1,090,389 SUPPLEMENTAL DISCLOSURES: Interest paid $71,126 $101,631 Income tax paid $19,097 $-- NON CASH TRANSACTION: Conversion of account receivable to note receivable $-- $841,686
SOURCE China Yongxin Pharmaceuticals, Inc.
|SOURCE China Yongxin Pharmaceuticals, Inc.|
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