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Tianyin Pharmaceutical co., Inc. Announces Record First Quarter 2010 Financial Results

CHENGDU, China, Nov. 13 /PRNewswire-Asia-FirstCall/ -- Tianyin Pharmaceutical Co., Inc., (NYSE Alternext: TPI), a manufacturer and supplier of modernized traditional Chinese medicine ("TCM") based in Chengdu, China, today announced fiscal results for its first quarter ended September 30, 2009.

Revenue for the first quarter of fiscal 2010 was approximately $13.4 million, an increase of 40.2% compared to $9.6 million for the first quarter of fiscal 2009. The increase resulted from higher sales volume of portfolio products, increased market penetration through the Company's broad distribution channels, which was supported by additional production capacity from the new facility. Revenues from the top three selling products, Ginkgo Mihuan Oral Liquid, Arpu Shuangxin Oral Liquid, and Azithromycin Dispersible Tablets, were collectively $7.1 million and represented approximately 53.1% of total revenues for the quarter. During the fourth quarter of fiscal 2009 sales of the top three selling products were approximately $7.8 million, or 58.6% of total revenues.

Cost of goods sold for the three months ended September 30, 2009 was approximately $6.3 million or 47.4% of revenue as compared to $4.7 million or 49.0% of revenue for the three months ended September 30, 2008, yielding a gross profit of $7.1 million and gross margins of 52.6%, compared to $4.9 million in gross profit and gross margins of 51.0% during the first quarter of fiscal 2009. Gross margins improved as a result of the product mix, in addition to enhanced cost controls and manufacturing efficiencies implemented during the production process.

Operating expenses for the three months ended September 30, 2009 were approximately $4.3 million, up 58.7% compared to the same period in 2008. Selling, general and administration expenses for the period increased to approximately $4.1 million from $2.6 million in the first quarter of fiscal 2009 as a result of the implementation of Tianyin's sales and marketing strategy, including increased sales payrolls and direct marketing expenses, in addition to a consulting expense amounted to $0.5 million paid to external service providers. Research and development expenses for the three months ended September 30, 2009 increased 134.1% to $0.2 million from the first quarter of fiscal 2009.

Operating income for the first quarter of fiscal 2010 totaled approximately $2.7 million, a 26.9% increase from the $2.2 million reported for the first quarter of fiscal 2009. Operating margins were 20.5% and 22.6% for the first quarter of fiscal 2010 and fiscal 2009, respectively as the Company continued to spend aggressively on sales and marketing initiatives to generate incremental product sales.

Net income was approximately $2.2 million in the first quarter of fiscal 2010, a 22.3% increase, compared to $1.8 million for the first quarter of fiscal 2009. The company had an effective tax rate of 18.9% and 16.7%, for the first quarter of fiscal 2010 and 2009, respectively. Diluted earnings per share were $0.08 compared to $0.07 for the first quarter of fiscal 2010 and fiscal 2009 respectively, based upon 27.5 million and 24.6 million shares. The divergence in the share account relates to accounting for the company's preferred shares which are convertible into common, in addition to warrants which were exercised.

"We are pleased to report another quarter of strong revenue growth and improved profitability. The results of our marketing strategies to support a high quality product portfolio are driving measured improvements in our revenue base. Additionally, increased production capacity is enabling us to accommodate higher volumes of several leading drugs, including Gingko Mihuan, through our distribution channels," stated Dr. Guoqing Jiang, Tianyin's Chief Executive Officer."

Balance Sheet and Cash Flow

Cash and cash equivalents and restricted cash totaled $14.4 million on September 30, 2009 compared to $12.4 million on June 30, 2009. The Company had a current ratio of 5.8 to 1 and total stockholders' equity of 46.2 million, which includes noncontrolling interest of $0.4 million, with total assets of $50.8 million versus total liabilities of $4.6 million on September 30, 2009. For the first three months of fiscal 2010, the Company generated $2.2 million in cash from operations versus $0.5 million for the same period in fiscal 2009.

Business Development & Outlook

On September 28, 2009, Tianyin appointed Mr. Tao Yang to the position of Chief Operating Officer. Mr. Yang has more than 18 years experience in the sales and marketing industry. He was appointed in November 2008 as Chief Advisor for Sales and Marketing and Special Advisor to Dr. Jiang, the CEO of the Company. Since then, Mr. Yang has helped implement a strategy to boost sales of leading products and further improve the efficiency of Tianyin's sales and marketing team.

On October 29, 2009, Tianyin announced it has formed a joint venture with Sichuan Mingxin Pharmaceutical Co., Ltd ("Mingxin") named Sichuan Jiangchuan Pharmaceutical Co., Ltd. ("Jiangchuan"). Tianyin owns 77% of Jiangchuan and will utilize this as the foundation for a broader, longer-term strategy to build a significant presence in the rapidly growing Chinese macrolide antibiotics market, while diversifying its revenue base of western pharmaceuticals.

On October 29, 2009 management increased fiscal 2010 guidance for the year which ends June 30, 2010 and expects to report revenues of more than $63.6 million and net income of at least $11.3 million, representing 48.3% and 43.0% year-over-year growth respectively.

"The Chinese stimulus plan and favorable policies for the health care industry are now starting to manifest themselves throughout the pharmaceutical industry by driving sales of many popular pharmaceutical products and creating the catalyst for long-term secular growth. We are extremely excited about our recently announced Joint Venture, which is named Sichuan Jiangchuan Pharmaceutical Co. Ltd. This will enable us to capitalize on the large and rapidly growing macrolide antibiotics market. Supported by our existing marketing expertise and extensive distribution channels, we are confident that this new initiative will create a meaningful growth driver in fiscal 2011 and beyond, while complementing the organic growth of our current product portfolio with widely used western style medications. With a solid business foundation and favorable policies from the Chinese government, we will continue to execute on our long-term growth plan while creating both near and long-term value for our shareholders," concluded Dr. Jiang.

Conference Call

The Company will host a conference call to discuss the 2010 first quarter financial results on Friday, November 13, 2009 at 10:30 a.m. ET. Interested participants should call +1-877-941-2321 within the United States, or US +1-480-629-9714 if calling internationally. The conference ID is 4182573. It is advisable to dial in approximately 5-10 minutes prior to 10:30 a.m. ET. If you are unable to participate in the call at the scheduled time, a playback will be available through November 21, 2009. To listen to the playback, please call +1-800-406-7325 from within the United States, or US +1-303-590-3030 internationally. Please use passcode 4182573 for the replay.

About Tianyin Pharmaceuticals

Tianyin is a manufacturer and supplier of modernized Traditional Chinese Medicine ("TCM") in China. It was established in 1994 and acquired by the current management team in August 2003. It has a comprehensive product portfolio of 39 products, 22 of which are listed in the highly selective National Medicine Catalog of the National Medical Insurance program. Tianyin owns and operates two GMP manufacturing facilities and an R&D platform supported by leading Chinese academic institutions. The Company has a pipeline of 17 pharmaceutical products pending approval. Tianyin has an extensive nationwide distribution network throughout China with a sales force of 720 salespeople. Tianyin is headquartered in Chengdu, Sichuan Province with two manufacturing facilities and a total of 1,365 employees. For more information about Tianyin, please visit .

Safe Harbor Statement

The 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:

    For the Company:
     Allen Tang, Ph.D., MBA, Assistant to the CEO
     Tel:   +86-158-2122-5642

     Mr. Matthew Hayden, HC International
     Tel:   +1-561-245-5155

    Consolidated Balance Sheets
                                                      September 30,  June 30,
                                                           2009       2009
    Current assets:
        Cash and cash equivalents                     $14,352,876 $12,352,223
        Accounts receivable, net of allowance
         for doubtful accounts of $172,182 and
         $171,947 at September 30, 2009 and June
         30, 2009, respectively                         7,121,470   5,620,519
        Inventory                                       3,686,431   3,808,289
        Advance payments                                  764,307   1,188,115
        Loan receivable                                   293,400          --
        Other receivables                                 201,321     601,912
        Other current assets                               62,560      81,277
                Total current assets                   26,482,365  23,652,335

    Property and equipment, net                        10,014,096   9,642,526

    Intangibles, net                                   14,302,974  12,037,483

                Total assets                          $50,799,435 $45,332,344

    Current liabilities:
        Accounts payable and accrued expenses          $1,577,677  $1,392,639
        Short-term bank loans                           1,400,985   1,399,075
        VAT taxes payable                                 475,592     458,930
        Income taxes payable                              510,250     490,514
        Other taxes payable                                11,473      11,890
        Dividends payable                                 233,683     325,417
        Other current liabilities                         341,957     307,934

    Total current liabilities                           4,551,617   4,386,399

                Total liabilities                       4,551,617   4,386,399

    Stockholders' equity:
        Common stock, $0.001 par value, 50,000,000
         shares authorized, 23,520,057 and
         17,908,912 shares issued and outstanding
         at September 30, 2009 and June 30, 2009,
         respectively                                      23,520      17,909
        Series A convertible preferred stock, $0.001
         par value, 2,655,250 and 7,146,500 shares
         issued and outstanding at September 30,
         2009 and June 30, 2009, respectively               2,655       7,147
        Additional paid-in capital                     22,740,187  19,694,514
        Statutory reserve                               2,299,807   2,299,807
        Treasury stock                                   (111,587)   (111,587)
        Retained earnings                              18,268,426  16,486,775
        Accumulated other comprehensive income          2,587,237   2,551,380
                Total stockholders' equity             45,810,245  40,945,945

    Noncontrolling interest                               437,573          --

                Total equity                           46,247,818  40,945,945

                Total liabilities and equity          $50,799,435 $45,332,344

    Consolidated Statements of Operations and Comprehensive Income
                                                    For the Three Months Ended
                                                           September 30,
                                                          2009        2008

    Sales                                             $13,405,203  $9,561,940

    Cost of sales                                       6,349,227   4,682,624

    Gross profit                                        7,055,976   4,879,316

    Operating expenses:
        Selling, general and administrative             4,117,766   2,633,361
        Research and development                          192,490      82,638
            Total operating expenses                    4,310,256   2,715,999

    Income from operations                              2,745,720   2,163,317

    Other income (expenses):
        Interest income                                    10,415          --
        Interest expense                                  (19,975)    (27,720)
        Other income (expenses)                            39,502)      4,245
            Total other expenses                          (49,062)    (13,475)

    Income before provision for income tax              2,696,658   2,149,842

    Provision for income tax                              509,936     358,849

    Net income before noncontrolling interest           2,186,722   1,790,993

    Noncontrolling interest                                (2,526)         --

    Net income                                          2,189,248   1,790,993

    Other comprehensive income
        Foreign currency translation adjustment            35,857      89,434

    Comprehensive income                               $2,225,105  $1,880,427

    Basic earnings per share                                $0.10       $0.09
    Diluted earnings per share                              $0.08       $0.07

    Weighted average number of common shares
        Basic                                          19,735,790  15,357,818
        Diluted                                        27,516,458  24,558,625

    Consolidated Statements of Cash Flows
                                                    For the Three Months Ended
                                                           September 30,
                                                             2009       2008
    Cash flows from operating activities:
      Net Income                                       $2,189,248  $1,790,993
      Adjustments to reconcile net income to net cash
       provided by (used in) operating activities:
      Depreciation and amortization                       197,037     119,399
      Noncontrolling interest                              (2,526)         --
      Share-based payments                                512,209          --
      Loss on disposal of fixed assets                     39,502          --
      Changes in current assets and current
        Accounts receivable                            (1,492,362)    (88,138)
        Inventory                                         126,979  (1,019,969)
        Other receivables                                 401,155    (339,566)
        Other current assets                               18,750     152,822
        Accounts payable and accrued expenses             183,242     (60,470)
        VAT taxes payable                                  16,025     (15,780)
        Income tax payable                                 19,054      16,489
        Other taxes payable                                  (433)    (22,708)
        Other current liabilities                          33,582     (29,277)

              Total adjustments                            52,214  (1,287,198)

              Net cash provided by operating
               activities                               2,241,462     503,795

    Cash flows from investing activities:
        Additions to property and equipment              (525,965)         --
        Additions to intangible assets - drug          (1,891,269)   (175,668)
        Loan receivable                                  (293,220)         --

                Net cash used in investing activities  (2,710,454)   (175,668)

    Cash flows from financing activities:
        Additional paid-in capital                      2,534,581          --
        Noncontrolling interest                           439,830          --
        Payment of dividends                             (499,331)         --

                Net cash provided by financing
                 activities                             2,475,080          --

    Effect of foreign currency translation on cash         (5,435)     32,648

    Net increase in cash and cash equivalents           2,000,653     360,775

    Cash and cash equivalents - beginning              12,352,223  12,057,150

    Cash and cash equivalents - ending                $14,352,876 $12,417,925

    Supplemental schedule of non cash activities
        Advance payments exchanged for intangible
         assets - drug                                   $425,169         $--

SOURCE Tianyin Pharmaceutical Co., Inc.

SOURCE Tianyin Pharmaceutical Co., Inc.
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