HAIKOU, China, Aug. 12, 2016 /PRNewswire/ -- China Pharma
Holdings, Inc. (NYSE MKT: CPHI) ("China Pharma," the
"Company" or "We"), an NYSE MKT listed corporation with its
fully-integrated specialty pharmaceuticals subsidiary based in
China, today announced financial
results for the quarter ended June 30,
2016.
Second Quarter Highlights
- Revenue was $3.5 million in the
second quarter of 2016, which represented a decrease of 37.6%
compared to $5.7 million in the same
period of 2015;
- Gross margin was 13.6% in the second quarter of 2016, compared
to (0.98%) in the same period of 2015;
- Loss from operations was $2.2
million in the second quarter of 2016 compared to income
from operations of $1.4 million in
the same period of 2015, a decrease of $3.7
million;
- Net loss was $2.5 million in the
second quarter of 2016 compared to net income of $1.1 million in the same period of 2015. Loss per
common share was $(0.06) per basic
and diluted share in the second quarter of 2016 compared with
income per common share of $0.03 per
basic and diluted share in the same period of 2015.
- As of June 30, 2016, the Company
had cash and cash equivalents of $6.3
million compared to $6.2
million as of December 31,
2015.
"The China Food and Drug Administration ('CFDA') issued "Notice
on Rectification Against Illegal Operation on Drug Logistic &
Distribution" on May 3, 2016.
As it had become the top priority for all pharmaceutical
distributors, to take measures to comply with this government
policy, their time and efforts had been arranged around the
inspection from CFDA, which delayed their ordinary promoting
practices, purchase and distribution activities, and further
negatively impacted the sales performance of our company during the
second quarter of 2016." said Ms. Zhilin
Li, China Pharma's Chairman and CEO. Ms. Li continued, "
With the implementation of Consistency Evaluation on Quality and
Efficacy of Generic Drugs, as well as the CFDA Rectification, we
continued to feel the pressure from macro-environment in our
industry. However, we still believe that our current operations and
financial position will allow us to secure the foundation for
steady business growth in the future."
Second Quarter 2016 Results
Revenue decreased by 37.6% to $3.5
million for the three months ended June 30, 2016, as compared to $5.7 million for the three months ended
June 30, 2015. This decrease was
primarily caused by several missed provincial tenders back in 2014
due to the fact that our new GMP certificates were not received
until November 2014 which negatively
impacted sales afterwards. To be specific, the original tender
practice actually lasted until April
2015 given the necessary process and timing of tender and
therefore did not show full negative impact on the sales in the
second quarter of 2015. Therefore, the sales decrease in the second
quarter of 2016 compared to its corresponding period in 2015
reflected the outcome of that event. In addition, the government's
healthcare-cost-controls posed continuous pressure upon our
sales.
For the three months ended June 30,
2016, our cost of revenue was $2.9
million, or 81.0% of total revenue, which represented a
decrease of $1.6 million from
$4.5 million, or 79.5% of total
revenue, in the same period of 2015. The decrease in cost of
revenue during the second quarter of 2016 was due to the revenue
decrease. The gross profit margin stayed close for the three months
ended June 30, 2016 and 2015.
We have had decreases in the sales estimates between the time
when raw materials were purchased and the time when the sales
performance is realized for certain products. We assess the
inventory obsolescence levels on a quarterly basis. As a result, we
determined that certain inventory was slow moving or obsolete.
Based on the developed estimates, we recognized an inventory
obsolescence expense of $0.2 million
and $1.2 million for the three months
ended June 30, 2016 and 2015,
respectively.
Gross profit for the three months ended June 30, 2016 was $0.5
million, compared to gross loss of $0.6 million in the same period 2015. Our gross
profit margin in second quarter 2016 was 13.6% compared to (1.0%)
in the same period 2015. Without the effect of inventory
obsolescence, management estimates that our gross profit would have
been approximately 19.0% in the second quarter of 2016 and 20.5% in
the second quarter of 2015.
Our selling expenses for the three months ended June 30, 2016 was $0.9
million, which accounted for 24.2% of the total revenue in
the second quarter of 2016, compared to $1.0
million or 17.8% of the total revenue in second quarter
2015. Due to many adjustments in our selling processes
under healthcare reform policies, despite the decrease in sales, we
still need to maintain personnel and continue our sales activities
to support the sales and collection of accounts receivable.
Our general and administrative expenses for the three months
ended June 30, 2016 were $0.8 million, compared to $0.6 million in the three months ended
June 30, 2015. General and
administrative expenses accounted for 22.1% and 8.1% of our total
revenues in second quarter 2016 and 2015, respectively. The
increase in general and administrative expenses in this quarter was
mainly due to the property tax incurred for our new GMP building
since the first quarter of 2016, as well as the increased
professional service expenses in the second quarter of 2016
compared to the same period last year.
Our bad debt expense for the three months ended June 30, 2016 was $0.5
million, compared to bad debt benefit of $3.1 million in the three months ended
June 30, 2015. The change was due to
our revision of estimate of allowance for doubtful accounts, which
resulted in the decrease in aged accounts receivable balance that
had not been allowed prior to the second quarter 2015, and
therefore incurred the bad debt benefit in that period.
During the second quarter of 2016, the Company reviewed the
contracts relating to advances made for purchases of intangible
assets with independent laboratories and determined that two
advance payments made by the Company for two formulas to two
independent laboratories were impaired. As a result, the Company
recognized an impairment loss for the advance payments made to
these laboratories in the amount of $822,539.
Net Loss for the three months ended June
30, 2016 was $2.5 million, or
loss per basic and diluted common share of $0.06, compared to net income of $1.1 million for the three months ended
June 30, 2015, or net income per
basic and diluted share of $0.03. The
change in our net income performance was mainly due to the bad debt
expenses difference and decrease in revenues in the second quarter
of 2016 compared to the same period of 2015.
Six Months Results
Revenue for the six months ended June 30,
2016 was $7.2 million, down
36.8% from revenue of $11.4 million
for the six months ended June 30,
2015.
Gross profit for the six months ended June 30, 2016 was $1.1
million, compared to $1.0
million in the same period of 2015. Gross profit margin for
the six months ended June 30, 2016
and 2015 were 15.6% and 8.8%, respectively. Without
considering the effect of inventory obsolescence, management
estimates that our gross profit margin would have been
approximately 17.3% and 21.3% for the six months ended June 30, 2016 and 2015 respectively.
Operating loss was $3.5 million
for the six months ended June 30,
2016, compared to $6.2 million
for the same period of 2015.
Net loss was $4.0 million, or
$0.09 per basic and diluted share for
the six months ended June 30, 2016,
compared to $6.8 million, or
$0.16 per basic and diluted share,
for the same period a year ago
Financial Condition
As of June 30, 2016, the Company
had cash and cash equivalents of $6.3
million compared to $6.2
million as of December 31,
2015. Year-over-year, working capital decreased to
$9.7 million in June 30, 2016 from $12.2
million as of December 31,
2015; and the current ratio was 1.7 times as of June 30, 2016, decreased from 2.0 times as of
December 31, 2015.
Our accounts receivable balance decreased to $4.3 million as of June
30, 2016 from $5.9 million as
of December 31, 2015.
Net cash provided by operating activities was $0.6 million in the six months ended June 30, 2016 compared to ($0.5 million) for the six months ended
June 30, 2015. This is mainly due to
lower net loss and the outcome of the changes in our sales
strategy: we enhanced the control of sales on credit, therefore
improved the collection of accounts receivable and advances from
customers; those efforts were partially offset by the increase in
bad debt expenses in this period.
Conference Call
The Company will hold a conference call at 8:30 am ET on August 12,
2016 to discuss the results of its second quarter of 2016.
Listeners may access the call by dialing 1-866-519-4004 or
65-671-350-90 for international callers, Conference ID #
54240245. A replay of the call will be accessible through
August 20, 2016 by dialing
1-855-452-5696 or 61-281-990-299 for international callers,
Conference ID # 54240245.
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 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 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.
Contact:
Ms. Diana Na Huang CFA
China Pharma Holdings, Inc.
Phone: +86-898-6681-1730 (China)
Email: hps@chinapharmaholdings.com
- FINANCIAL TABLES FOLLOW -
CHINA PHARMA HOLDINGS,
INC.
|
CONDENSED CONSOLIDATED BALANCE
SHEETS
|
(Unaudited)
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
2016
|
|
2015
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
6,285,239
|
|
$
6,248,760
|
Restricted cash
|
|
1,253,579
|
|
-
|
Banker's acceptances
|
|
7,526
|
|
-
|
Trade accounts receivable, less allowance for
doubtful
accounts of $29,385,012 and
$28,644,398, respectively
|
|
4,347,828
|
|
5,882,509
|
Other receivables, less allowance for
doubtful
accounts of $78,313 and $74,400,
respectively
|
|
171,881
|
|
290,739
|
Advances to suppliers
|
|
2,765,105
|
|
2,533,354
|
Inventory, less allowance for
obsolescence
of $6,628,787 and $8,417,095,
respectively
|
|
8,938,484
|
|
9,662,750
|
Prepaid expenses
|
|
47,335
|
|
339,140
|
Total Current
Assets
|
|
23,816,977
|
|
24,957,252
|
|
|
|
|
|
Advances for purchases of intangible
assets
|
|
40,255,706
|
|
42,030,649
|
Property and equipment, net of accumulated
depreciation of
|
|
|
|
|
$10,774,784 and $9,422,912,
respectively
|
|
27,214,609
|
|
29,393,257
|
Intangible assets, net of accumulated amortization
of
$4,391,609 and $4,360,004,
respectively
|
|
689,961
|
|
841,075
|
TOTAL ASSETS
|
|
$
91,977,253
|
|
$
97,222,233
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Trade accounts
payable
|
|
$
2,863,197
|
|
$
2,824,521
|
Accrued expenses
|
|
39,933
|
|
143,409
|
Other payables
|
|
1,745,875
|
|
1,710,283
|
Advances from
customers
|
|
822,345
|
|
595,681
|
Other payables - related
parties
|
|
1,354,567
|
|
1,354,567
|
Current portion of construction loan
facility
|
|
1,505,265
|
|
1,540,666
|
Short-term notes
payable
|
|
4,515,794
|
|
4,621,998
|
Banker's acceptance notes
payable
|
|
1,253,579
|
|
-
|
Total Current
Liabilities
|
|
14,100,555
|
|
12,791,125
|
Non-current
Liabilities:
|
|
|
|
|
Construction loan
facility
|
|
10,235,799
|
|
10,784,661
|
Deferred revenue
|
|
346,065
|
|
708,408
|
Long-term deferred tax
liability
|
|
333,592
|
|
296,890
|
Total
Liabilities
|
|
25,016,011
|
|
24,581,084
|
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
|
Retained earnings
|
|
29,933,300
|
|
33,939,998
|
Accumulated other comprehensive
income
|
|
13,394,158
|
|
15,067,367
|
Total Stockholders'
Equity
|
|
66,961,242
|
|
72,641,149
|
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY
|
|
$
91,977,253
|
|
$
97,222,233
|
CHINA PHARMA HOLDINGS,
INC.
|
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
|
AND COMPREHENSIVE INCOME
(LOSS)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months
|
|
For the Six
Months
|
|
|
Ended June
30,
|
|
Ended June
30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
Revenue
|
|
$
3,542,230
|
|
$
5,674,175
|
|
$
7,182,724
|
|
$
11,369,105
|
Cost of
revenue
|
|
2,868,031
|
|
4,511,951
|
|
5,939,492
|
|
8,946,657
|
Inventory
obsolescence
|
|
192,102
|
|
1,218,051
|
|
120,316
|
|
1,419,148
|
|
|
|
|
|
|
|
|
|
Gross (loss)
profit
|
|
482,097
|
|
(55,827)
|
|
1,122,916
|
|
1,003,300
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
857,694
|
|
1,012,463
|
|
1,826,201
|
|
2,001,416
|
General and administrative
expenses
|
|
780,953
|
|
459,026
|
|
1,099,883
|
|
931,455
|
Research and development
expenses
|
|
96,661
|
|
174,850
|
|
190,094
|
|
335,678
|
Bad debt
expense
|
|
494,548
|
|
(3,141,116)
|
|
1,075,848
|
|
3,963,540
|
Impairment of long term
assets
|
|
822,539
|
|
-
|
|
822,539
|
|
-
|
Total operating
expenses
|
|
3,052,395
|
|
(1,494,777)
|
|
5,014,565
|
|
7,232,089
|
|
|
|
|
|
|
|
|
|
Subsidy
income
|
|
348,672
|
|
-
|
|
348,672
|
|
-
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
|
(2,221,626)
|
|
1,438,950
|
|
(3,542,977)
|
|
(6,228,789)
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Interest
income
|
|
33,123
|
|
30,222
|
|
66,715
|
|
57,077
|
Interest
expense
|
|
(243,883)
|
|
(322,422)
|
|
(486,192)
|
|
(636,197)
|
Net other
expense
|
|
(210,760)
|
|
(292,200)
|
|
(419,477)
|
|
(579,120)
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
(2,432,386)
|
|
1,146,750
|
|
(3,962,454)
|
|
(6,807,909)
|
Income tax
expense
|
|
(21,416)
|
|
(19,428)
|
|
(44,244)
|
|
(38,712)
|
Net income
(loss)
|
|
(2,453,802)
|
|
1,127,322
|
|
(4,006,698)
|
|
(6,846,621)
|
Other comprehensive income
(loss) - foreign currency
|
|
|
|
|
|
|
|
|
translation
adjustment
|
|
(2,153,639)
|
|
259,216
|
|
(1,673,209)
|
|
745,772
|
Comprehensive income
(loss)
|
|
$
(4,607,441)
|
|
$
1,386,538
|
|
$
(5,679,907)
|
|
$
(6,100,849)
|
Income (loss) per
share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
(0.06)
|
|
$
0.03
|
|
$
(0.09)
|
|
$
(0.16)
|
Diluted
|
|
$
(0.06)
|
|
$
0.03
|
|
$
(0.09)
|
|
$
(0.16)
|
CHINA PHARMA HOLDINGS, INC.
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
(Unaudited)
|
|
|
For the Six Months
|
|
|
Ended June 30,
|
|
|
2016
|
|
2015
|
Cash Flows from Operating
Activities:
|
|
|
|
|
Net loss
|
|
$
(4,006,698)
|
|
$
(6,846,621)
|
Depreciation and amortization
|
|
1,728,273
|
|
1,884,749
|
Bad debt (benefit) expense
|
|
1,075,848
|
|
3,963,540
|
Deferred income taxes
|
|
44,244
|
|
38,712
|
Inventory obsolescence reserve
|
|
(1,621,255)
|
|
231,326
|
Impairment of long-term assets
|
|
822,539
|
|
-
|
Changes in assets and liabilities:
|
|
|
|
|
Trade accounts and other
receivables
|
|
(534,417)
|
|
(2,437,248)
|
Advances to suppliers
|
|
(294,753)
|
|
(494,834)
|
Inventory
|
|
2,767,597
|
|
2,508,519
|
Trade accounts payable
|
|
105,290
|
|
1,231,153
|
Accrued taxes payable
|
|
(41,984)
|
|
81,600
|
Other payables and accrued expenses
|
|
(22,833)
|
|
23,927
|
Advances from customers
|
|
244,323
|
|
(1,048,730)
|
Prepaid expenses
|
|
288,705
|
|
348,196
|
Net Cash Provided by Operating
Activities
|
|
554,879
|
|
(515,711)
|
|
|
|
|
|
Cash Flows from Investing
Activities:
|
|
|
|
|
Purchases of property and equipment
|
|
(66,213)
|
|
(264,869)
|
Net Cash Used in Investing
Activities
|
|
(66,213)
|
|
(264,869)
|
|
|
|
|
|
Cash Flows from Financing
Activities:
|
|
|
|
|
Payments of construction term loan
|
|
(306,028)
|
|
-
|
Net Cash Provided by Financing
Activity
|
|
(306,028)
|
|
-
|
|
|
|
|
|
Effect of Exchange Rate Changes on
Cash
|
|
(146,159)
|
|
9,790
|
Net (Decrease) Increase in Cash and Cash
Equivalents
|
|
36,479
|
|
(770,790)
|
Cash and Cash Equivalents at Beginning of
Period
|
|
6,248,760
|
|
5,319,990
|
Cash and Cash Equivalents at End of
Period
|
|
$
6,285,239
|
|
$
4,549,200
|
|
|
|
|
|
Supplemental Cash Flow
Information:
|
|
|
|
|
Cash paid for interest
|
|
$
486,192
|
|
$
629,424
|
|
|
|
|
|
Supplemental Noncash Investing and Financing
Activities:
|
|
|
|
|
Accounts payable for purchases of property and
equipment
|
|
-
|
|
108,224
|
Accounts receivable collected with banker's
acceptances
|
|
643,457
|
|
952,353
|
Inventory purchased with banker's
acceptances
|
|
635,806
|
|
924,000
|
Restricted cash related to letter of
credit
|
|
1,274,293
|
|
-
|
Advances for intangible assets purchased with
banker's acceptances
|
|
-
|
|
398,937
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/china-pharma-holdings-inc-reports-second-quarter-financial-results-300312838.html
SOURCE China Pharma Holdings, Inc.