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TPI Reports Third Quarter Fiscal Year 2013 Financial Results

CHENGDU, China, May 14, 2013 /PRNewswire/ -- Tianyin Pharmaceutical Inc. (NYSE Amex: TPI), a pharmaceutical company that specializes in the patented biopharmaceutical, modernized traditional Chinese medicine (mTCM), branded generics and active pharmaceutical ingredients (API) announced financial results for third quarter of the fiscal year 2013.

Third Quarter Fiscal Year 2013 Ended March 31, 2013 Financial Highlights:

  • Revenue was $15.5 million compared with $14.4 million in 3Q12 an increase of 8.1% year over year,
  • Operating income was $1.8 million, compared with $1.3 million in 3Q12, an increase of 38.8% year over year,
  • Net Income was $1.3 million compared with $0.9 million in 3Q12, an increase of 40.9% year over year,
  • Earnings per share of $0.04 per basic share, $0.04 per diluted share, compared with $0.03 per basic share, or $0.03 per diluted share in 3Q12, 
  • Cash and cash equivalents totaled $26.4 million on March 31, 2013; Operating cash flow for the nine months ended March 31, 2013 was $0.8 million, compared with operating cash flow of $4.6 million for the nine months ended March 31, 2012.
  • Comparison of results for the quarters ended March 31, 2013 and 2012:QuartersEnded March 31,20132012 

    (In millions)Sales$


    14.4Cost of sales$


    9.5Gross profit$


    4.8Total operating expenses$


    3.5Operating income$


    1.3Provision for income taxes$


    0.4Net income$



    Sales for the quarter ended March 31, 2013 was $15.5 million, an increase of 8.1% as compared to $14.4 million for the quarter ended March 31, 2012. Due to the holiday season in the quarters ended March 31, including Chinese New Year in February and the following Yuanxiao Festival, the sales in our third quarter were lower compared with the rest of the year. The slight but meaningful sales growth compared with the same period last year reflected a gradual and steady recovery of the market as it adapts to the ongoing healthcare reform in China which resulted in restrictive pricing on the generics sector.

    In the quarter ended March 31, 2013, our top five core product sales were:


    Gingko mihuan oral liquid (GMOL) for stroke and cardiovascular disorders: $5.6 million2.

    Mycophenolate mofetil capsules (MM) for renal transplant: $1.6 million3.

    Azithromycin tablets (AZI) for infection: $1.1 million4.

    Qingre jiedu oral liquid (QR): $1.2 million5.

    Qianlie Shule capsules (QS) for prostate conditions: $0.39 millionThese core products totaled $9.9 million in sales, representing 64% of our revenue in the quarter ended March 31, 2013, and 94% increase compared with core products sales of $5.1 million in the quarter ended March 31, 2012. The increase in our core products sale was primarily the result of GMOL sales increasing by 115% from $2.6 million in the quarter ended March 31, 2012 to $5.6 million in the quarter ended March 31, 2013. We believe that this was the result of inclusion of GMOL in a number of Provincial Essential Drug List (EDL) lists, such as the provinces of Henan and Shandong and the City of Chongqing. The contribution from our distribution business through TMT amounted to $3.6 million at 13% gross margin in the quarter ended March 31, 2013.

    Cost of Sales for the quarter ended March 31, 2013 was $9.7 million or 62.3% of sales, as compared to $9.5 million or 66.5% of sales for the quarter ended March 31, 2012. The percentage decrease in our cost of sales from the previous period was mainly attributable to a greater mix of higher margin products augmented by a pricing stabilization of our lower margin generic products.

    Gross Margin for the quarter ended March 31, 2013 was 37.7% as compared to 33.5% for the quarter ended March 31, 2012. Our gross margin improved, predominately as a result of a greater mix of higher margin products being sold during the period, supported by a leveling off of negative pricing pressures in our lower margin generic portfolio. We expect that our overall gross margin in the near term, on a quarter to quarter comparison basis, will likely improve from last year based upon continued improvement of our portfolio mix of higher margin products.Operating Expenses were $4.0 million for the quarter ended March 31, 2013, as compared to $3.5 million for the quarter ended March 31, 2012. The increase in operating expenses was mainly associated with an increase in sales and marketing costs.

    Net Income was $1.3 million with a net margin of 8.2% for the quarter ended March 31, 2013, as compared to net income of $0.9 million with net margin of 6.2% for the quarter ended March 31, 2012. The increase of the net income and the improvement in net margin were predominately a direct result of improvements in our gross margins with reasonable sales and marketing expenditure.

    Diluted earnings per share for the quarter ended March 31, 2013 were $0.04 based on 29.3 million shares compared with the earnings of $0.03 per diluted share for the quarter ended March 31, 2012, based on 29.3 million shares.

    Balance Sheet and Cash FlowAs of March 31, 2013, we had working capital totaling $35.5 million, including cash and cash equivalents of $26.4 million. Net cash provided by operating activities was $0.8 million for the nine months ended March 31, 2013 as compared with net cash generated from operating activities as $4.7 million for the nine months ended March 31, 2012. The net decrease in operating cash flow was predominately the result of: 1) an increase in the payment of trade notes payable of $(4.7) million that was due during the nine months ended March 31, 2013, 2) an increase of inventory of $(1.1) million, in combination with 3) an decrease of accounts receivables of $0.5 million and advance from customer of $0.6 million. We believe that TPI is adequately funded to meet all of our working capital and capital expenditure needs for fiscal year 2013.

    Business Development & OutlookR&D for additional indications of flagship product Gingko Mihuan (GMOL)

    Our flagship product Gingko Mihuan Oral Liquid (GMOL, SFDA certification number: H20013079; patent number: 20061007800225) contributes approximately 39% to our total revenue. Clinical application and information gathered from our physicians showed that in addition to our approved indication for GMOL: cardiovascular disorders, coronary heart disease and cerebral ischemic attack including strokes, off-label use of GMOL have been indicated in hepatic diseases and ophthalmological diseases. The validity of these observations is currently being investigated.

    Jiangchuan Macrolide Project (JCM)

    TPI has completed the 240-ton JCM facility for the R&D, manufacturing and sale of API and chemical intermediates of macrolide antibiotics. In January 2012, JCM was approved for its GMP certification designated as "CHUAN M0799," which is valid for the period of December 31, 2011 until December 31, 2015. Following the efficiency improvement and calibration for large scale production, JCM has started producing macrolide API for TPI's production of Azithromycin Dispersible Tablets (SFDA No: H20074145) since July 2012. Currently the monthly production capacity of JCM is 10 tons of Azithromycin macrolide API. The API produced by JCM is mainly used to supply for TPI's own Azithromycin Tablets.Tianyin Medicine Trading Distribution Business (TMT)

    TMT is established to distribute products manufactured by both TPI and other pharmaceutical companies to fuel our expanding sales network as well as to provide synergy to our existing organic product portfolio. TMT has been distributing mainly TPI's own products since its inception in 2009. Since 2010, TPI has signed and later extended distribution contracts with Jiangsu Lianshui Pharmaceutical ("Lianshui") to distribute Lianshui-branded generic injection products including cough suppressant, antibiotics, anti-inflammatory medicines and other healthcare indications. On average, TMT distribution revenue contributed approximately $3-5 million sales per quarter to our total revenue.

    Pre-extraction and formulation plant development at Qionglai Facility (QLF)

    In preparation for the new Good Manufacturing Practice (GMP) standards stipulated by the PRC government in early 2011, TPI initiated the process of optimizing the manufacturing facilities and production lines in compliance with the new GMP standards by the end of 2013. Concurrently, the city of Chengdu has re-designated various industrial parks for particular industries such as automobile, biotechnologies, pharmaceuticals and chemical engineering. As a consequence, TPI's current manufacturing facility at the Longquan district, east of Chengdu, which is designated for use by the automotive industry, is scheduled to be relocated to Qionglai city, south of Chengdu, which is designated for use by the pharmaceutical industry. The Qionglai facility (QLF) is approximately 18 miles from the Company's recently completed JCM facility. The proposed relocation project also includes our TCM pre-extraction plant, which is located near the center of city of Chengdu, a rapidly expanding residential area.

    QLF is estimated to be 80 mu or approximately 13 acres. Both pre-extraction plant and the formulation plant are to be relocated to Qionglai County. The combined QLF plant, designed and constructed according to the latest GMP standards, is expected to relieve the current capacity saturation at TPI's facilities. The re-location and construction cost is estimated at $25 million for Phase I, which is scheduled to be completed in the first half of 2013 calendar year and will expand the current capacity by 30%. For Phase II of the QLF project, an additional $10 million in capital investment may be made to double the current capacity in the following years if it is so required. As of mid April 2013, the construction of QLF has been completed which was immediately followed by equipment installation and a series of procedures that prepares the plant for the final GMP certification. The Company plans to initiate the GMP certification process for the QLF TCM pre-extraction facility in mid June 2013. The pre-extraction facility will conduct initial processing of TCM raw material, separation using alcohol or water precipitation, filtration, centrifugation, concentration and purification of TCM pharmaceutical ingredients which will be further processed for the production of mTCM at the formulation facility.

    In order to facilitate a favorable tax treatment for Chengdu Tianyin at Qionglai County where QLF is located, Chengdu Tianyin entered into a Share Transfer Agreement (the "Agreement") with the shareholders of Sichuan Hengshuo Pharmaceutical Co., Ltd ("Sichuan Hengshuo" or "HSP") to acquire 100% ownership of HSP, a PRC pharmaceutical trading company for a total consideration of approximately $0.2 million (RMB 1.3 million). The share transfer was closed on November 30, 2012, and Chengdu Tianyin now owns 100% of HSP and Dr. Guoqing Jiang has become the legal representative of the acquired entity. As of March 31, 2013, results of HSP are consolidated into the consolidated financial statements presented herein.

    Fiscal 2013 GuidanceThe Company continues to face restrictive pricing pressures in our general marketplace as a result of the enactment of additional healthcare reform policies.
    We believe these policies could continue to put pressure on our ability to increase pricing both short-term and over the next several years, moderately affecting our revenue and margin guidance.
    However, we believe that the positive revenue growth we are realizing in our JCM and TMT distribution business, along with the growth we are experiencing in our core product portfolio, may help us offset to a certain degree of the general pricing pressures we have been witnessing.
    Given these conditions, we presently believe that we may be able to deliver revenue growth of approximately 5% to 10% in our fiscal year 2013 at a 10% net margin.

    We believe the following factors will influence the future growth perspectives of our Company:


    Market expansion and revenue growth of TPI's core product portfolio led by its flagship product Gingko Mihuan (GMOL), Azithromycin and other major products;2)

    Ramp up of our JCM revenue especially third party sales in the fiscal year 2013;3)

    The gradual stabilization of generic sales due to the progressive pricing restrictions as a result of the ongoing healthcare reform in China;4)

    Steady TMT distribution revenue contribution; and5)

    QLF relocation and smooth transition of production capacity.Management will continue to evaluate the Company's business outlook and communicate any changes on a quarterly basis or as when appropriate.

    Conference CallSenior management of TPI will host its earnings conference call for the third quarter of fiscal year 2013 ended March 31, 2013 to be held at 9:00 a.m. ET on Wednesday, May 15th, 2013.

    Interested parties may access the call by dialing

    Toll free:


    1-480-629-9664The conference ID is 4617492. It is advisable to dial in approximately 5 minutes prior to the start of the call.

    A replay will be available by calling

    Toll free:



    05/15/13 @ 12:00 pm E.T.To:

    05/29/13 @ 11:59 pm E.T.Replay Pin Number:

    4617492This call is being web cast by ViaVid Broadcasting and can be accessed at ViaVid's website at the following link:

    About TPIHeadquartered at Chengdu, China, TPI is a pharmaceutical company that specializes in the development, manufacturing, marketing and sales of patented biopharmaceutical, modernized traditional Chinese medicines, branded generics and other pharmaceuticals. TPI currently manufactures a comprehensive portfolio of 58 products, 24 of which are listed in the highly selective national medicine reimbursement list, 7 are included in the essential drug list of China. TPI's pipeline targets various high incidence healthcare indications.

    For more information about TPI, please visit: or write to:

    Safe Harbor StatementThe Statements which are not historical facts contained in this press release are forward-looking statements that involve certain risks and uncertainties including but not limited to risks associated with the uncertainty of future financial results, additional financing requirements, development of new products, government approval processes, the impact of competitive products or pricing, technological changes, the effect of economic conditions and other uncertainties detailed in the Company's filings with the Securities and Exchange Commission.

    For more information, please contact:

    Investors Contact:
    Tel: +86-28-8551-6696 (Chengdu, China)
    +86 134-36-550011 (China)


    23rd Floor Unionsun Yangkuo Plaza
    No. 2, Block 3, South Renmin Road
    Chengdu, 610041


     TIANYIN PHARMACEUTICAL CO., INC.Consolidated Balance SheetsMarch 31,June 30,20132012Assets(Unaudited)Current assets:Cash and cash equivalents$


    35,152,295Restricted cash-3,534,550Accounts receivable, net of allowance for doubtful accounts of $114,653and $113,862 at March 31, 2013 and June 30, 2012, respectively10,857,28711,272,367Inventory7,032,9895,863,013Advance payments-642,075Other current assets424,289436,664Total current assets44,680,62556,900,964Property and equipment, net38,642,33826,458,349Intangibles, net20,500,15020,958,226Goodwill207,480-Total assets$104,030,593$104,317,539LiabilitiesCurrent liabilities:Accounts payable and accrued expenses$


    1,586,151Accounts payable – construction related414,274740,832Short-term bank loans6,064,8006,023,000Trade notes payable-4,675,750Income tax payable474,877804,595Other taxes payable594,939500,782Other current liabilities440,491466,982Total current liabilities9,222,84714,798,092Total liabilities9,222,84714,798,092EquityStockholders' equity:Common stock, $0.001 par value, 50,000,000 shares authorized,29,332,791 shares issued and outstanding at March 31, 2013and June 30, 2012, respectively29,44629,446Additional paid-in capital30,122,63230,104,902Treasury stock(135,925)(135,925)Statutory reserve6,120,1436,120,143Retained earnings49,696,60545,022,329Accumulated other comprehensive income8,741,9188,100,526Total stockholders' equity94,574,81989,241,421Noncontrolling interest232,927278,026Total equity94,807,74689,519,447Total liabilities and equity$104,030,593$104,317,539 

     TIANYIN PHARMACEUTICAL CO., INC.Consolidated Statements of Operations(Unaudited)For the Three Months EndedFor the Nine Months EndedMarch 31,March 31,2013201220132012Sales$15,525,694$14,358,800$49,100,689$50,124,079Cost of sales9,669,9059,541,55330,197,41433,365,481Gross profit5,855,7894,817,24718,903,27516,758,598Operating expenses:Selling expenses2,776,6042,329,1168,423,1297,608,072General and administrative expenses1,063,168973,9473,282,5553,015,108Research and development223,216222,047661,569643,546Total operating expenses4,062,9883,525,11012,367,25311,266,726Income from operations1,792,8011,292,1376,536,0225,491,872Other income (expenses):Interest income43,93855,998143,382134,205Interest expense(103,871)(81,956)(325,743)(214,731)Gain on disposal of fixed assets---229,177Other expenses-(4,727)-(14,627)Total other income (expenses)(59,933)(30,685)(182,361)134,024Income before provision for income tax1,732,8681,261,4526,353,6615,625,896Provision for income tax474,381368,3381,726,1911,543,995Net income1,258,487893,1144,627,4704,081,901Less: Net loss attributable tononcontrolling interest(10,222)(23)(46,806)(74,081)Net income attributable to TianyinPharmaceutical Co., Inc.$1,268,709$893,137$4,674,276$4,155,982Basic earnings per share$0.04$0.03$0.16$0.14Diluted earnings per share$0.04$0.03$0.16$0.14Weighted average number of common shares outstandingBasic29,332,79129,294,87929,332,79129,300,266Diluted29,332,79129,294,87929,332,79129,300,266 

     TIANYIN PHARMACEUTICAL CO., INC.Consolidated Statements of Comprehensive Income(Unaudited)For the Three Months EndedFor the Nine Months EndedMarch 31,March 31,2013201220132012Net income$1,258,487$893,114$4,627,470$4,081,901Other comprehensive incomeForeign currency translation adjustment528,801814,414643,1002,329,456Total other comprehensive income528,801814,414643,1002,329,456Comprehensive income1,787,2881,707,5285,270,5706,411,357Less: comprehensive income (loss)attributable to noncontrolling interest(8,850)(35,856)(45,099)149,523Comprehensive income attributable toTianyin Pharmaceutical Co., Inc.$1,796,138$1,743,384$5,315,669$6,261,834 


     TIANYIN PHARMACEUTICAL CO., INC.Consolidated Statements of Cash Flows(Unaudited)For the Nine Months EndedMarch 31,20132012Cash flows from operating activities:Net Income$


    4,081,901Adjustments to reconcile net income to net cashprovided by (used in) operating activities:Depreciation and amortization1,791,658851,358Gain on disposal of fixed assets-(216,956)Share-based payments17,73039,501Provision for bad debts-43,907Changes in current assets and current liabilities:Accounts receivable490,993(868,875)Inventory(1,123,980)(1,240,194)Advance payments643,4921,668,970Other current assets15,334(228,829)Accounts payable and accrued expenses(361,984)(57,186)Accounts payable – construction related(330,141)(531,643)Trade notes payable(4,686,075)2,361,750Income tax payable(333,727)(641,079)Other taxes payable90,256(644,589)Other current liabilities(29,592)(29,299)Total adjustments(3,816,036)506,836Net cash provided by operating activities811,4344,588,737Cash flows from investing activities:Additions to property and equipment(1,697,741)(2,733,195)Proceeds from disposal of fixed assets-544,440Addition to construction in progress(11,437,200)-Acquisition of subsidiary – Hengshuo(206,505)-Additions to intangible assets – approved drugs-(771,505)Additions to intangible assets – land use right-(1,830,570)Net cash used in investing activities(13,341,446)(4,790,830)Cash flows from financing activities:Restricted cash3,542,355(4,298,385)Proceeds from short-term bank loans-4,408,600Repayments of short-term bank loans-(2,834,100)Treasury stock-(24,338)Net cash provided by (used in) financing activities3,542,355(2,748,223)Effect of foreign currency translation on cash201,4221,085,610Net decrease in cash and cash equivalents(8,786,235)(1,864,706)Cash and cash equivalents – beginning35,152,29531,724,906Cash and cash equivalents – ending$26,366,060$29,860,200Supplemental disclosures of cash activitiesCash paid for interest$


    214,731Cash paid for income taxes$



    SOURCE Tianyin Pharmaceutical Co., Inc.
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