HAIKOU, China, April 3, 2018 /PRNewswire/ -- China Pharma
Holdings, Inc. (NYSE MKT: CPHI) ("China Pharma," the "Company" or
"We"), an NYSE American listed corporation with a fully-integrated
specialty pharmaceuticals subsidiary based in China, today announced financial results for
the fiscal year ended December 31,
2017.
Full Year Highlights
- Revenue decreased 15.1% to $13.2
million in fiscal year 2017 from $15.6 million in fiscal year 2016;
- Gross margin was 18.7% in fiscal year 2017, compared to 20.7%
in fiscal 2016.
- Impairment loss was $14.2 million
in fiscal year 2017 compared to $4.0
million in 2016, which represented an increase of
$10.2 million;
- Loss from operations was $18.7
million in fiscal year 2017 compared to $8.2 million in 2016, which represented an
increase of $10.5 million;
- Net loss was $19.3 million in
fiscal year 2017 compared to $9.2
million in 2016. Loss per common share was $(0.44) per basic and diluted share in fiscal
2017 compared with $(0.21) per basic
and diluted share in fiscal year 2016.
"We tried to increase sales in 2017 but the speed of our sales
recovery was not as fast as we expected. Nevertheless, increasing
sales remains our top priority. Management will continue to
vigorously promote sales through active participation in recent
provincial market openings to receive new drug tender offers and
through further research of the basic medical market," said Ms. Zhilin
Li, China Pharma's Chairman and CEO. Ms. Li continued,
"The ongoing generic drug consistency evaluations and reform of
China's drug production
registration and review policies will have a major impact on the
future development of our industry and may change its business
patterns. Under the requirements of the consistency evaluation
policy, the company actively evaluated the technical difficulty,
investment demand, time requirement, and investment return rate of
all applicable marketed products and pipeline products, and
recognized a significant impairment loss related to our intangible
assets in 2017. We will continue to actively adapt to state policy
guidance and further evaluate market conditions for our current
existing products, pipeline products, and competition in the market
in order to optimize our development strategy."
Full Year Results
Revenue decreased by 15.2% to $13.2
million for the year ended December
31, 2017, as compared to $15.6
million for the year ended December
31, 2016. This decrease was mainly due to the negative
impact around Health-care insurance cost-control as well as
policies for reducing the proportion of drug cost to total
health-care spending.
Gross profit for the year ended December
31, 2017 was $2.5 million,
compared to $3.2 million in 2016. Our
gross profit margin in 2017 was 18.7% compared to 20.7% in 2016.
This decline in our gross profit margin was mainly due to that our
raw material prices have generally increased in recent quarters
along with the improvement of industry standards and the
strengthening of environmental protection requirements. In
addition, adverse drug pricing control policies have negatively
impacted our gross margins.
Our selling expenses for the year ended December 31, 2017 were $3.5 million, a decrease of $0.5 million compared to $4.0 million for the year ended December 31, 2016. Selling expenses
accounted for 26.2% of the total revenue in 2017 compared to 25.9%
in 2016. The increase was mainly the result of additional
marketing, consulting and product promotional efforts in certain
Chinese provinces. Because of adjustments in our sales practices
resulting from healthcare reform policies, despite the overall
decrease in sales, we require additional personnel and expenses to
support our sales and the collection of accounts receivable.
Our general and administrative expenses for the year ended
December 31, 2017 were $2.0 million, which represented an increase of
$0.3 million compared to $2.3 million in 2016. General and administrative
expenses accounted for 15.3% and 14.6% of our total revenues in
2017 and 2016, respectively.
Our bad debt expenses for the year ended December 31, 2017 was $1.4
million, which represented an increase of $0.3 million compared to $1.1 million in 2016. The increase in our bad
debt expenses was mainly due to the change in the composition of
aging of accounts receivables for the years ended December 31, 2017 compared to December 31, 2016.
Our impairments for the year ended December 31, 2017 were $14.2 million, compared to $4.0 million in 2016. It was mainly because of
that as a pharmaceutical company, we have been focusing on the
development and maintenance of our intangible assets, mainly in the
form of medical formulas. Because of recently implemented
government policies such as consistency evaluations, our management
made certain assessments regarding the impairment of our intangible
assets as of December 31, 2017 and
December 31, 2016 respectively, and
identified six and five formulas that would likely be unable to
generate positive cash flow in the foreseeable future and therefore
recognized impairment loss on them accordingly.
Net loss for year ended December 31,
2017 was $19.3 million,
compared to net loss of $9.2 million
for the year ended December 31, 2016.
The decrease in net loss was mainly a result of the increase in
impairment loss and bad debt expenses.
Financial Condition
As of December 31, 2017, the
Company had cash and cash equivalents of $2.0 million compared to $2.7 million as of December 31, 2016. Working capital decreased to
$3.1 million as of September 30, 2017 from $7.1 million as of December 31, 2016; and the current ratio was 1.3
and 1.7 times at December 31, 2017
and December 31, 2016,
respectively.
As of December 31, 2017, our net
accounts receivable was $2.3 million,
compared to $4.0 million as of
December 31, 2016.
For the year ended December 31,
2017, cash flow from operating activities was $0.8 million, as compared to $2.9 million in 2016.
Conference Call
The Company will hold a conference call at 8:30 am E.T. on April 3,
2018 to discuss the results of full year 2017. Listeners may
access the call by dialing 1-866-519-4004 or 65-671-350-90 for
international callers, Conference ID # 1264719. A replay of
the call will be accessible through April
11, 2018 by dialing 1-855-452-5696 or 61-281-990-299 for
international callers, Conference ID # 1264719.
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 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
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:
China Pharma Holdings, Inc.
Ms. Diana Na Huang
Phone: +86-898-6681-1730 (China)
Email: hps@chinapharmaholdings.com
- FINANCIAL TABLES FOLLOW -
CHINA PHARMA
HOLDINGS, INC.
|
CONSOLIDATED
BALANCE SHEETS
|
|
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
2017
|
|
2016
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
2,030,214
|
|
$
2,665,802
|
Restricted
cash
|
|
709,796
|
|
1,088,879
|
Banker's
acceptances
|
|
39,867
|
|
-
|
Trade accounts
receivable, less allowance for doubtful
|
|
|
|
|
accounts of
$18,209,734 and $15,664,496, respectively
|
|
2,293,120
|
|
3,999,809
|
Other receivables,
less allowance for doubtful
|
|
|
|
|
accounts of $40,010
and $71,548, respectively
|
|
162,981
|
|
224,373
|
Advances to
suppliers
|
|
461,307
|
|
2,003,792
|
Inventory
|
|
6,407,155
|
|
7,310,939
|
Prepaid
expenses
|
|
185,647
|
|
226,357
|
Total Current
Assets
|
|
12,290,087
|
|
17,519,951
|
|
|
|
|
|
Advances for
purchases of intangible assets
|
|
23,722,954
|
|
35,498,059
|
Property and
equipment, net
|
|
23,541,003
|
|
24,967,448
|
Intangible assets,
net
|
|
398,856
|
|
534,682
|
TOTAL
ASSETS
|
|
$
59,952,900
|
|
$
78,520,140
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Trade accounts
payable
|
|
$
1,141,138
|
|
$
3,060,374
|
Accrued
expenses
|
|
276,368
|
|
139,830
|
Other
payables
|
|
2,858,701
|
|
2,502,694
|
Advances from
customers
|
|
581,132
|
|
811,232
|
Other payables -
related parties
|
|
1,354,567
|
|
1,354,567
|
Current portion of
construction loan facility
|
|
2,305,430
|
|
1,440,154
|
Bankers' acceptance
notes payable
|
|
709,796
|
|
1,088,879
|
Total Current
Liabilities
|
|
9,227,132
|
|
10,397,730
|
Non-current
Liabilities:
|
|
|
|
|
Construction loan
facility
|
|
6,916,291
|
|
8,640,927
|
Deferred tax
liability
|
|
738,175
|
|
572,349
|
Total
Liabilities
|
|
16,881,598
|
|
19,611,006
|
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
|
|
5,479,809
|
|
24,757,374
|
Accumulated other
comprehensive income
|
|
13,957,709
|
|
10,517,976
|
Total
Stockholders' Equity
|
|
43,071,302
|
|
58,909,134
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
$
59,952,900
|
|
$
78,520,140
|
CHINA PHARMA
HOLDINGS, INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
AND COMPREHENSIVE
INCOME (LOSS)
|
|
|
|
|
|
|
|
|
|
|
|
|
For the
Year
|
|
|
Ended December
31,
|
|
|
2017
|
|
2016
|
Revenue
|
|
$
13,212,314
|
|
$
15,570,514
|
Cost of
revenue
|
|
10,743,764
|
|
12,352,004
|
|
|
|
|
|
Gross
profit
|
|
2,468,550
|
|
3,218,510
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
Selling
expenses
|
|
3,460,596
|
|
4,036,590
|
General and
administrative expenses
|
|
2,019,949
|
|
2,265,851
|
Research and
development expenses
|
|
90,474
|
|
365,969
|
Bad debt
expense
|
|
1,393,576
|
|
1,086,449
|
Impairment
loss
|
|
14,183,969
|
|
3,962,141
|
Total operating
expenses
|
|
21,148,564
|
|
11,717,000
|
|
|
|
|
|
Subsidy
income
|
|
-
|
|
343,023
|
|
|
|
|
|
Loss from
operations
|
|
(18,680,014)
|
|
(8,155,467)
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
Interest
income
|
|
64,414
|
|
130,575
|
Interest
expense
|
|
(539,334)
|
|
(849,557)
|
Net other
expense
|
|
(474,920)
|
|
(718,982)
|
|
|
|
|
|
Loss before income
taxes
|
|
(19,154,934)
|
|
(8,874,449)
|
Income tax
expense
|
|
(122,631)
|
|
(308,175)
|
Net
loss
|
|
(19,277,565)
|
|
(9,182,624)
|
Other comprehensive
income - foreign currency
|
|
|
|
|
translation
adjustment
|
|
3,439,733
|
|
(4,549,391)
|
Comprehensive
loss
|
|
$
(15,837,832)
|
|
$
(13,732,015)
|
Loss per
share:
|
|
|
|
|
Basic and
diluted
|
|
$
(0.44)
|
|
$
(0.21)
|
Weighted average
shares outstanding
|
|
43,579,557
|
|
43,579,557
|
CHINA PHARMA
HOLDINGS, INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
|
For the
Year
|
|
|
Ended December
31,
|
|
|
2017
|
|
2016
|
Cash Flows from
Operating Activities:
|
|
|
|
|
Net loss
|
|
$
(19,277,565)
|
|
$
(9,182,624)
|
Depreciation and
amortization
|
|
3,291,330
|
|
3,078,074
|
Inventory Write
off
|
|
118,003
|
|
|
Bad debt
expense
|
|
1,393,576
|
|
1,086,449
|
Deferred income
taxes
|
|
122,631
|
|
308,175
|
Impairment of
intangible assets
|
|
14,183,969
|
|
3,962,141
|
Changes in assets and
liabilities:
|
|
|
|
|
Trade accounts and
other receivables
|
|
51,024
|
|
(1,097,556)
|
Advances to
suppliers
|
|
1,614,958
|
|
380,779
|
Inventory
|
|
1,718,336
|
|
2,734,612
|
Trade accounts
payable
|
|
(2,045,948)
|
|
815,198
|
Accrued taxes
payable
|
|
18,753
|
|
72,107
|
Other payables and
accrued expenses
|
|
420,523
|
|
377,663
|
Advances from
customers
|
|
(274,068)
|
|
265,928
|
Prepaid
expenses
|
|
(494,306)
|
|
94,762
|
Net Cash Provided
by Operating Activities
|
|
841,216
|
|
2,895,708
|
|
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
Purchases of property
and equipment
|
|
(136,479)
|
|
(193,404)
|
Net Cash Used in
Investing Activities
|
|
(136,479)
|
|
(193,404)
|
|
|
|
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
Payments of
construction term loan
|
|
(1,479,944)
|
|
(1,505,346)
|
Payments of short
term notes payable
|
|
-
|
|
(4,516,039)
|
Net Cash Provided
by Financing Activity
|
|
(1,479,944)
|
|
(6,021,385)
|
|
|
|
|
|
Effect of Exchange
Rate Changes on Cash
|
|
139,619
|
|
(263,877)
|
Net (Decrease)
Increase in Cash and Cash Equivalents
|
|
(635,588)
|
|
(3,582,958)
|
Cash and Cash
Equivalents at Beginning of Period
|
|
2,665,802
|
|
6,248,760
|
Cash and Cash
Equivalents at End of Period
|
|
$
2,030,214
|
|
$
2,665,802
|
|
|
|
|
|
Supplemental Cash
Flow Information:
|
|
|
|
|
Cash paid for income
taxes
|
|
$
-
|
|
$
-
|
Cash paid for
interest
|
|
$
525,788
|
|
$
836,011
|
|
|
|
|
|
Supplemental
Noncash Investing and Financing Activities:
|
|
|
|
|
Issuance of banker's
acceptances
|
|
$
709,796
|
|
$
1,088,879
|
Accounts receivable
collected with banker's acceptances
|
|
531,294
|
|
935,265
|
Inventory purchased
with banker's acceptances
|
|
492,906
|
|
935,265
|
View original
content:http://www.prnewswire.com/news-releases/china-pharma-holdings-inc-reports-fiscal-year-2017-financial-results-300623074.html
SOURCE China Pharma Holdings, Inc.