-- 2Q18 Total Sales Up 25.5% YoY and Non-GAAP Adjusted Net
Income Down 2.8% YoY in RMB terms, or
Total Sales Up 34.8% YoY to $120.4 Million and Net Income Down 7.7% YoY to
$28.6 Million in USD terms --
-- 1H18 Total Sales Up 19.5% YoY and Non-GAAP Adjusted Net
Income Down 0.4% YoY in RMB terms, or
Total Sales Up 28.8% YoY to $232.8 Million and Net Income Down 1.3% YoY to
$60.2 Million in USD terms
--
-- Revises Full Year Financial Forecast
--
BEIJING, Aug. 3, 2018 /PRNewswire/ -- China Biologic
Products Holdings, Inc. (NASDAQ: CBPO)
("China Biologic" or the "Company"), a leading fully
integrated plasma-based biopharmaceutical company in China, today announced its unaudited financial
results for the second quarter of 2018.
Second Quarter 2018 Financial Highlights
- Total sales in the second quarter of 2018 increased by
25.5% in RMB terms and 34.8% in USD terms to $120.4 million from $89.3
million in the same quarter of 2017.
- Gross profit increased by 39.7% to $82.7 million from $59.2
million in the same quarter of 2017. Gross margin
increased to 68.7% from 66.3% in the same quarter of 2017.
- Income from operations decreased by 15.3% in RMB terms,
and 8.9% in USD terms to $35.9
million from $39.4 million in
the same quarter of 2017. Operating margin decreased to
29.8% from 44.1% in the same quarter of 2017. Excluding
TianXinFu, income from operations decreased by 30.3% in RMB
terms and 25.1% in USD terms in the second quarter of 2018 compared
to the same quarter of 2017, and operating margin decreased
to 27.5% from 44.1% in the same quarter of 2017.
- Non-GAAP adjusted income from operations decreased by
3.7% in RMB terms and increased by 3.6% in USD terms to
$49.2 million from $47.5 million in the same quarter of 2017.
Excluding TianXinFu, non-GAAP adjusted income from
operations decreased by 21.0% in RMB terms and 15.1% in USD
terms in the second quarter of 2018 compared to the same quarter of
2017.
- Net income attributable to the Company
decreased by 14.1% in RMB terms and 7.7% in USD terms to
$28.6 million from $31.0 million in the same quarter of 2017.
Fully diluted earnings per share
decreased by 23.9% to $0.83 compared
to $1.09 in the same quarter of 2017.
Excluding TianXinFu, net income attributable to
the Company decreased by 29.7% in RMB terms and 24.2% in USD
terms in the second quarter of 2018 compared to the same quarter of
2017.
- Non-GAAP adjusted net income attributable to the Company
decreased by 2.8% in RMB terms and increased by 4.4% in USD terms
to $40.2 million from $38.5 million in the same quarter of 2017.
Non-GAAP adjusted earnings per share decreased
to $1.17 from $1.35 in the same quarter of 2017. Excluding
TianXinFu, non-GAAP adjusted net income attributable to the
Company decreased by 19.4% in RMB terms and 13.2% in USD terms
in the second quarter of 2018 compared to the same quarter of
2017.
- Certain income statement and balance sheet items impacted by
the TianXinFu acquisition are presented for comparison
purposes.
Mr. David Hui Li, Chairman of the
Company, commented, " Our second quarter of 2018 continued to be
challenging due to the ongoing impact of regulatory changes and
intensified competition in China's
healthcare market. Because of spending controls by regional
government-sponsored medical insurance programs, an increasing
number of hospitals across various provinces are implementing
stricter drug purchase budgets by capping drug revenue to no more
than 30% of a hospital's total revenue. This has led to another
high-double-digit decline in our direct sales channel revenue in
the second quarter. To offset this negative impact, the Company
pursued new distributor and pharmacy channels. However, the
intensified competition in the distribution market has caused over
10% year-over-year price declines across all major plasma products,
deteriorated payment terms, and increased marketing expenditures.
In addition, although our placenta polypeptide product experienced
a 70% sales revenue growth in RMB terms, its sales volume declined
over 30% due to the implementation of the two-invoice policy and
the exclusion of it as a supplemental drug from the reimbursement
lists of certain provinces. Our TianXinFu business performance met
our expectations, and we remain conservatively optimistic about its
growth in the second half of the year."
"Recently, the Board of Directors
implemented certain important personnel changes. As previously
disclosed, the Board removed David
Gao as Chairman and director of the Board, and CEO and
President of the Company. Subsequently, the Board also terminated
David Gao's employment for cause
based on the Board's review of the facts and circumstances of his
removal. Concurrent to Mr. Gao's removal, two other directors
stepped down from the Board. The Board elected me as Chairman, and
elected two industry veterans Mr. Qi Ning and Mr. Bing Li to the
Board as independent directors. While the Board is conducting
search for a new CEO, the Board has appointed Mr. Zhijun Tong as the acting CEO. Mr. Tong is an
experienced entrepreneur and executive, and has been a director of
the Company since 2012. The Board believes that the overhaul of the
senior management and the changes at the Board level will greatly
improve the Company's governance and management and rejuvenate our
business, particularly in today's challenging
environment."
Mr. Li continued, "In July, we received the operating permit for
our new Feicheng branch plasma collection facility and commenced
commercial operations immediately. We also recently extended our
strategic collaboration agreement with Xinjiang Deyuan for another
3 years to purchase at least an additional 500 tonnes of plasma. We
believe this extended collaboration is mutually beneficial, as it
secures plasma supply to enhance our Guizhou facility's utilization
efficiency."
"For the second half of the year, we expect the regulatory
headwinds and market competitive dynamics to persist, which will
impact our guidance for the year. However, we remain optimistic
about the mid- to long-term prospects of our industry, which we
believe will continue to transit from a market of demand serving to
demand creation in the next three to five years. Specifically, the
industry growth engine will shift from albumin to IVIG and
coagulation products, which have much higher margins and greater
market potential. This transition will open many new opportunities
for us and will take China's
plasma industry into the next development stage to replicate what
happened in the U.S and Europe
decades ago. Currently, due to limited awareness among Chinese
doctors and medical practitioners, the growth of immunoglobulin
products and high-end premium coagulation products have lagged
behind that of albumin, and under-penetration of these products
will persist in China's markets.
Our new Board leadership will
support the executive management team to upgrade our commercial
capabilities and to solidify our leading market position by
expanding into new sales channels and by promoting our
immunoglobulin and coagulation products. We will remain focused on
improving per liter economics by leveraging our leading R&D
capabilities to expedite the launch of new pipeline products. As
always, we remain focused on pursuing long-term, sustainable growth
and maximizing long-term shareholder value," concluded Mr. Li.
Second Quarter 2018 Financial Performance
Total sales in the second quarter of 2018 increased by
25.5% in RMB terms, or 34.8% in USD terms due to the benefit of
favorable exchange rates, to $120.4
million from $89.3 million in
the same quarter of 2017. The increase in total sales was partly
attributable to a $13.0 million
contribution from TianXinFu, which accounted for approximately
10.8% of total sales for the quarter. Excluding TianXinFu, total
sales in the second quarter of 2018 increased by 11.9% in RMB
terms, attributable to the sales increases in placenta polypeptide
products, human albumin products, coagulation factor products, and
certain immunoglobulin products, which was partly offset by the
decrease in the sales of IVIG products. For plasma products, total
sales in the second quarter of 2018 increased by 5.0% in RMB terms,
or 12.7% in USD terms, to $90.3
million from $80.1 million in
the same quarter of 2017.
During the second quarter of 2018, human albumin and IVIG
products remained the Company's two largest sales contributors.
Revenue from human albumin increased by 9.6% in RMB terms, or 17.6%
in USD terms, from $32.4 million in
the second quarter of 2017 to $38.1
million in the second quarter of 2018. Revenue from IVIG
products decreased by 11.8% in RMB terms, or 5.4% in USD terms,
from $29.7 million in the second
quarter of 2017 to $28.1 million in
the second quarter of 2018. As a percentage of total sales, sales
from human albumin and IVIG products were 31.7% and 23.4%,
respectively, in the second quarter of 2018. Excluding the
contribution from TianXinFu, human albumin and IVIG products
represented 35.5% and 26.2% of total sales, respectively, compared
to 36.3% and 33.3%, respectively, in the second quarter of 2017.
The large decrease of IVIG sales' percentage mainly reflected the
combined effects of decreased sales volume and sales prices year
over year.
The sales volume of human albumin products increased by 15.6%
for the second quarter of 2018 compared to the same quarter of
2017, primarily due to increased sales volumes in the distributor
and pharmacy channels, which was partly offset by decreased
prescription volumes at various hospitals due to the ongoing
healthcare regulatory changes in China. The sales volume of IVIG products
decreased by 9.0% for the second quarter of 2018 compared to the
same quarter of 2017, mainly reflecting decreased prescription
volumes at various hospitals with the same effect of policy
headwinds to human albumin.
The average prices for human albumin and IVIG products decreased
by 5.2% and 3.1%, respectively, in RMB terms in the second quarter
of 2018 compared to the same quarter of 2017 because of greater
sales volume in the distributor channel and further price discounts
to certain distributors reflecting intensified market competition
for major plasma products. In USD terms, due to favorable exchange
rates, the average price for human albumin and IVIG products
increased by 1.9% and 4.1% year over year, respectively.
Revenue from specialty immunoglobulin products increased by
12.8% in RMB terms, or 21.2% in USD terms, in the second quarter of
2018 compared to the same quarter of 2017, reaching 12.8% of total
sales. This increase was mainly due to higher sales volumes of
human rabies immunoglobulin products and human tetanus
immunoglobulin products.
Revenue from coagulation factor products, including human
coagulation factor VIII, human prothrombin complex concentrate, and
the newly launched human fibrinogen products, increased by 50.9% in
RMB terms, or 62.3% in USD terms, in the second quarter of 2018
compared to the same quarter of 2017, representing 7.1% of total
sales. The growth mainly came from the launch of our human
fibrinogen products in the beginning of 2018 and the increased
sales volumes of the Company's human coagulation factor VIII and
human prothrombin complex concentrate products, which is reflective
of the Company's ongoing medical marketing activities.
Revenue from placenta polypeptide products increased by 71.6% in
RMB terms, or 84.4% in USD terms, in the second quarter of 2018
compared to the same quarter of 2017, reaching 14.1% of total
sales, which was supported by higher unit selling prices in
connection with the wider implementation of the two-invoice policy.
However, the sales volume of placenta polypeptide products
continued to decline as a result of their inclusion in regional
supplemental drug lists, which put pressure on their prescription
volume.
Cost of sales increased by 24.9% to $37.6 million in the second quarter of 2018
compared to the same quarter of 2017. As a percentage of total
sales, cost of sales decreased to 31.2% from 33.7% in the same
quarter of 2017. The decrease in cost of sales as a percentage of
total sales mainly reflected the higher gross margin of TianXinFu.
Excluding TianXinFu, cost of sales was 33.6% of total sales,
remaining stable year over year, a net impact of a higher sales
price for the Company's placenta polypeptide product and lower
sales prices for its human albumin and IVIG products.
Gross profit increased by 39.7% to $82.7 million in the second quarter of 2018 from
$59.2 million in the same quarter of
2017. Gross margin was 68.7% and 66.3% in the second
quarters of 2018 and 2017, respectively.
Total operating expenses in the second quarter of 2018
was $46.9 million compared to
$19.8 million in the same quarter of
2017. As a percentage of total sales, total operating expenses
increased to 39.0% in the second quarter of 2018 from 22.2% in the
same quarter of 2017. Excluding TianXinFu, total operating expenses
increased by $22.0 million, or
111.1%, to $41.8 million in the
second quarter of 2018. This increase mainly consisted of an
increase of $16.7 million in selling
expenses and an increase of $5.6
million in general and administrative expenses.
Selling expenses in the second quarter of 2018 was
$24.4 million compared to
$3.6 million in the same quarter of
2017. More than half of the increase was related to the sales of
placenta polypeptide products with the remainder related to the
sales of plasma products and TianXinFu's sales of its dura mater
products. For placenta polypeptide products and certain
hyper-immune products, because certain previous multi-layer
distributor channels were disqualified due to the two-invoice
regulation, the Company implemented new sales strategies including
using an internal sales force and engaging third party contract
service organizations to promote its placenta polypeptide products.
For other plasma products, in order to solidify its competitiveness
within distributor channel customers, the Company incurred
additional promotion and marketing costs. TianXinFu's selling
expenses included a $2.0 million
amortization expense for the intangible asset of customer
relationships associated with the Company's acquisition of
TianXinFu. Excluding this intangible asset amortization expense,
selling expenses accounted for 18.6% of total sales in the second
quarter of 2018 compared to 4.0% in the same quarter of 2017.
General and administrative expenses in the second quarter
of 2018 was $20.6 million compared to
$14.3 million in the same quarter of
2017. As a percentage of total sales, general and administrative
expenses were 17.1% and 16.0% in the second quarter of 2018 and the
same quarter of 2017, respectively. The increase in general and
administrative expenses mainly included a $2.7 million increase of share-based compensation
expenses and a $1.0 million increase
of Shandong Taibang's depreciation expense and property tax for its
new facility. Excluding the impact of share-based compensation
expenses, non-GAAP general and administrative expenses would have
been 8.1% and 6.9% of total sales in the second quarter of 2018 and
the same quarter of 2017, respectively.
Research and development expenses in the second quarter
of 2018 remained at $1.9 million
compared to the same quarter of 2017. As a percentage of total
sales, research and development expenses decreased to 1.6% in the
second quarter of 2018 from 2.1% in the same quarter of 2017.
Income from operations for the second quarter of 2018
decreased by 15.3% in RMB terms, or 8.9% in USD terms, to
$35.9 million from $39.4 million in the same quarter of 2017.
Operating margin decreased to 29.8% in the second quarter of
2018 from 44.1% in the same quarter of 2017. Excluding
TianXinFu, income from operations for the second quarter
of 2018 decreased by 30.3% in RMB terms, or 25.1% in USD terms, to
$29.5 million from $39.4 million in the same quarter of 2017.
Income tax expense was $6.7
million for the second quarter of 2018 compared to
$6.9 million in the same quarter of
2017. The effective income tax rate was 16.4% and 16.5% for the
second quarters of 2018 and 2017, respectively.
Net income attributable to the Company decreased
by 14.1% in RMB terms, or 7.7% in USD terms, to $28.6 million
in the second quarter of 2018 from $31.0
million in the same quarter of 2017. Net margin
decreased to 23.8% in the second quarter of 2018 from 34.7% in the
same quarter of 2017. Diluted net earnings per share
decreased to $0.83 in the second
quarter of 2018 compared to $1.09 in
the same quarter of 2017. Excluding TianXinFu, net income
attributable to the Company decreased by 29.7% in RMB terms, or
24.2% in USD terms, in the second quarter of 2018 compared to the
same quarter of 2017, and net margin decreased to 21.9% in
the second quarter of 2018 from 34.8% in the same quarter of
2017.
Non-GAAP adjusted income from operations decreased by
3.7% in RMB terms, or increased by 3.6% in USD terms, to
$49.2 million in the second quarter
of 2018 from $47.5 million in the
same quarter of 2017. Excluding TianXinFu, non-GAAP adjusted
income from operations decreased by 21.0% in RMB terms, or
15.1% in USD terms, in the second quarter of 2018 compared to the
same quarter of 2017.
Non-GAAP adjusted net income attributable to the Company
decreased by 2.8% in RMB terms, or increased by 4.4% in USD terms,
to $40.2 million in the second
quarter of 2018 from $38.5 million in
the same quarter of 2017. Non-GAAP net margin decreased to
33.4% in the second quarter of 2018 from 43.1% in the same quarter
of 2017. Non-GAAP adjusted net income per diluted share
decreased to $1.17 in the second
quarter of 2018 from $1.35 in the
same quarter of 2017. Excluding TianXinFu, non-GAAP adjusted net
income attributable to the Company decreased by 19.4% in RMB
terms, or 13.2% in USD terms, in the second quarter of 2018
compared to the same quarter of 2017.
Non-GAAP adjusted income from operations for the second
quarter of 2018 excludes $10.8
million in non-cash employee share-based compensation
expenses and $2.5 million in
amortization expense of intangible assets and land use rights
related to the acquisition of TianXinFu.
Non-GAAP adjusted net income and diluted earnings per
share for the second quarter of 2018 exclude $9.9 million in non-cash employee share-based
compensation expenses and $1.7
million in amortization expense of intangible assets and
land use rights related to the acquisition of TianXinFu.
First Half 2018 Financial Performance
Total sales in the first half of 2018 increased by 19.5%
in RMB terms, or 28.8% in USD terms, to $232.8 million from $180.7
million in the same period of 2017. This includes a
$24.4 million contribution from
TianXinFu, which accounts for approximately 10.5% of total sales
for the first half of 2018. Excluding TianXinFu, total sales in the
first half of 2018 increased by 7.0% in RMB terms as a result of
increases in the sales of placenta polypeptide products and certain
immunoglobulin products, which was partly offset by decreases in
the sales of human albumin and IVIG products. For plasma products,
total sales in the first half of 2018 increased by 0.8% in RMB
terms, or 8.7% in USD terms, to $175.3
million from $161.3 million in
the same period of 2017. As a percentage of total sales, sales from
human albumin products and IVIG products accounted for 30.9% and
25.7%, respectively, for the first half of 2018. Excluding the
contribution from TianXinFu, human albumin and IVIG products were
34.5% and 28.7% of total sales, respectively.
Cost of sales increased by 14.4% to $71.3 million in the first half of 2018 compared
to $62.3 million in the same period
of 2017. As a percentage of total sales, cost of sales decreased to
30.6% from 34.5% in the same period of 2017. The decrease in cost
of sales as a percentage of total sales mainly reflected the higher
gross margin of TianXinFu. Excluding TianXinFu, cost of sales
decreased to 32.9% of total sales, mainly due to the higher sales
price of the Company's placenta polypeptide product.
Gross profit increased by 36.4% to $161.5 million in the first half of 2018 from
$118.4 million in the same period of
2017. Gross margin was 69.4% and 65.5% in the first half of
2018 and 2017, respectively.
Total operating expenses in the first half of 2018 was
$86.7 million compared to
$40.2 million in the same period of
2017. As a percentage of total sales, total operating expenses
increased to 37.2% in the first half of 2018 from 22.2% in the same
period of 2017. Excluding TianXinFu, total operating expenses
increased by $36.3 million, or 90.3%,
to $76.5 million in the first half of
2018. This increase mainly consisted of an increase of $29.8 million in selling expenses and an increase
of $7.2 million in general and
administrative expenses.
Income from operations for the first half of 2018
decreased by 11.3% in RMB terms, or 4.3% in USD terms, to
$74.8 million from $78.2 million in the same period of 2017.
Excluding TianXinFu, income from operations for the
first half of 2018 decreased by 24.9% in RMB terms, or 19.1% in USD
terms, in the first half of 2018 compared to the same period of
2017.
Income tax expense in the first half of 2018 was
$13.5 million compared to
$13.8 million in the same period of
2017. The effective income tax rate was 15.9% and 16.6% for the
first halves of 2018 and 2017, respectively.
Net income attributable to the Company decreased
by 8.5% in RMB terms, or 1.3% in USD terms, to $60.2 million
in the first half of 2018 from $61.0
million in the same period of 2017. Net margin
decreased to 25.9% in the first half of 2018 from 33.8% in the same
period of 2017. Diluted earnings per share for the first
half of 2018 decreased to $1.75 from
$2.15 for the same period of 2017.
Excluding TianXinFu, net income attributable to the Company
decreased by 22.8% in RMB terms, or 16.8% in USD terms, in the
first half of 2018 compared to the same period of 2017, and net
margin decreased to 24.4% in the first half of 2018 from 33.8%
in the same period of 2017.
Non-GAAP adjusted income from operations decreased by
2.4% in RMB terms, or increased by 5.2% in USD terms, to
$99.3 million in the first half of
2018 from $94.4 million in the same
period of 2017. Excluding TianXinFu, non-GAAP adjusted income
from operations decreased by 18.3% in RMB terms, or 11.9% in
USD terms in the first half of 2018 compared to the same period of
2017.
Non-GAAP adjusted net income attributable to the Company
decreased by 0.4% in RMB terms, or increased by 7.5% in USD terms,
to $81.6 million in the first half of
2018 from $75.9 million in the same
period of 2017. Non-GAAP adjusted net income per diluted
share decreased to $2.37 in the
first half of 2018 from $2.67 in the
same period of 2017. Excluding TianXinFu, non-GAAP adjusted net
income attributable to the Company decreased by 15.8% in RMB
terms, or 9.1% in USD terms, in the first half of 2018 compared to
the same period of 2017.
Non-GAAP adjusted income from operations for the
first half of 2018 excludes $19.8
million in non-cash employee share-based compensation
expenses and $4.6 million in
amortization expense of intangible assets and land use rights
related to the acquisition of TianXinFu.
Non-GAAP adjusted net income and diluted earnings per
share for the first half of 2018 exclude $18.2 million in non-cash employee share-based
compensation expenses and $3.1
million in amortization expense of intangible assets and
land use rights related to the acquisition of TianXinFu.
As of June 30, 2018, the Company
had $103.3 million in cash on hand
and demand deposits, $118.3
million in time deposits, and $144.6
million in financial instruments.
Net cash provided by operating activities for the first
half of 2018 was $45.5 million,
including an $11.6 million
contribution from TianXinFu, compared to $36.9 million for the same period of 2017.
Excluding TianXinFu, the $3.0 million
decrease in net cash provided by operating activities was a
combined result of: 1) the negative impact from a decrease in net
income, an increase in accounts receivable, an increase in
prepayments and deferred expenses, and decreases in accounts
payable and tax payable; and 2) the positive impact from an
increase of other payables and accrued liabilities, and a slowdown
of increase in inventory compared to the first half of 2017.
Excluding TianXinFu, accounts receivable increased by
$30.3 million during the first half
of 2018 compared to $26.1 million in
the same period of 2017. The accounts receivable turnover days for
plasma products increased to 88 days during the first half of 2018
from 51 days in the same period of 2017, reflecting longer credit
terms to hospitals as a result of the nationwide healthcare
regulation changes and intensified competition in the distributor
channel.
Excluding TianXinFu, inventories increased by $20.3 million in the first half of 2018. This is
lower than a $22.8 million inventory
increase in the same period of 2017, when Shandong Taibang
stockpiled inventory to prepare for the planned temporary
production suspension.
Excluding TianXinFu, other payables and accrued liabilities
increased by $17.9 million in the
first half of 2018 compared to a decrease of $2.9 million in the first half of 2017. The
increase mainly reflected more marketing activities carried out by
third party contract service organizations that the Company engaged
to promote its placenta polypeptide and certain plasma products in
compliance with the two-invoice policy.
Net cash used in investing activities for the first half
of 2018 was $168.9 million compared
to $16.6 million for the same period
of 2017. Net cash used in investing activities in the first half of
2018 mainly consisted of a $529.6
million payment for the purchase of time deposits and
financial instruments and a $19.1
million payment for the acquisition of property, plant, and
equipment, intangible assets, and land use rights. This was partly
offset by $97.7 million in cash
received upon acquisition of TianXinFu and the maturity of
$282.1 million in time deposits and
financial instruments. In the same period of 2017, the Company paid
$16.6 million for the acquisition of
property, plant, and equipment and land use rights for Shandong
Taibang and Guizhou Taibang.
Net cash provided by financing activities for the first
half of 2018 was $0.8 million
compared to $14.8 million for the
same period of 2017. Net cash provided by financing activities in
the first half of 2018 represented proceeds of $0.8 million from stock options exercised. Net
cash provided by financing activities in the first half of 2017
mainly consisted of $14.3 million in
short-term loan net proceeds.
Financial Outlook
The Company is making a downward revision to its full year 2018
forecast. The company expects non-GAAP adjusted income from
operations to increase by 0% to
2% in RMB terms and non-GAAP adjusted net income to decrease
by 2% to 4% in RMB terms over full
year 2017 financial results. Excluding TianXinFu, full year 2018
non-GAAP adjusted income from operations is expected to decrease by
16% to 18% in RMB terms and
non-GAAP adjusted net income to decrease by 19% to 21% in RMB terms over full year 2017
financial results.
The full year 2018 forecast was lowered to account for
worse-than-expected results for the first half of 2018 and an
ongoing challenging outlook in the second half of the year due to
the following factors:
- persisting regulatory headwinds, which
places downward pressure on sales growth;
- intensified competition in
China's plasma industry, which
continues to drive costs higher and prices lower among plasma
product providers in China;
- investments in long-term improvements
and upgrades to the marketing and sales capabilities, which places
additional downward pressure on the bottom line; and
- a one-time provision in connection
with the new facility project in Guizhou and certain fixed assets among certain
non-operating collection stations.
In the interest of increasing transparency, the Company intends
to provide future financial outlook using non-GAAP adjusted income
from operations and non-GAAP adjusted net income instead of sales.
The Company believes that providing a financial outlook using
income from operations, while
excluding non-GAAP factors such as non-cash employee share-based
compensation expenses and amortization expense of intangible assets
and land use rights related to the acquisition of TianXinFu,
provides greater clarity and understanding of the Company's
operations, especially in light of price surges for polypeptide
products and certain hyper-immune products under the two-invoice
policy accompanied by proportionately increased selling
expenses.
This guidance does not factor in any potential foreign currency
translation impact. Having previously adopted an exchange rate of
approximately RMB6.76 = $1.00 based on weighted average quarterly
exchange rates in 2017 in translating 2017 financial results, the
Company expects that the non-GAAP adjusted income from operations
and non-GAAP adjusted net income in USD terms in 2018 could be
affected by the foreign currency translation impact.
This guidance excludes potential acquisitions, and necessarily
assumes no significant adverse product price changes during 2018.
This forecast reflects the Company's current and preliminary views,
which are subject to change.
Conference Call
The Company will host a conference call at 7:30 am Eastern Time on August 6, 2018, which is 7:30 pm Beijing Time on August 6, 2018, to discuss its second quarter
2018 results and answer questions from investors. Listeners may
access the call by dialing:
US:
|
1 888 346
8982
|
International:
|
1 412 902
4272
|
Hong Kong:
|
852 301
84992
|
China:
|
4001
201203
|
A telephone replay will be available one hour after the
conclusion of the conference all through August 13, 2018. The dial-in details are:
US:
|
1 877 344
7529
|
International:
|
1 412 317
0088
|
Passcode:
|
10122849
|
A live and archived webcast of the conference call will be
available through the Company's investor relations website at
http://chinabiologic.investorroom.com.
About China Biologic Products Holdings, Inc.
China Biologic Products Holdings, Inc. (NASDAQ: CBPO) is a
leading fully integrated plasma-based biopharmaceutical company in
China. The Company's products are
used as critical therapies during medical emergencies and for the
prevention and treatment of life-threatening diseases and
immune-deficiency related diseases. China Biologic is headquartered
in Beijing and manufactures over
20 different dosage forms of plasma products through its indirect
majority-owned subsidiary, Shandong Taibang Biological Products
Co., Ltd. and its wholly owned subsidiary, Guizhou Taibang
Biological Products Co., Ltd. The Company also has an equity
investment in Xi'an Huitian Blood Products Co., Ltd. The Company
sells its products to hospitals, distributors and other healthcare
facilities in China. For
additional information, please see the Company's website
www.chinabiologic.com.
Non-GAAP Disclosure
This news release contains non-GAAP financial measures that
exclude non-cash compensation expenses related to options and
restricted shares granted to employees and directors under the
Company's 2008 Equity Incentive Plan, and amortization of acquired
intangible assets. To supplement the Company's unaudited
consolidated financial statements presented on a GAAP basis, the
Company has provided non-GAAP financial information excluding the
impact of these items in this release. The Company's management
believes that its presentation of non-GAAP financial measures
provides useful supplementary information to and facilitates
additional analysis by investors. A reconciliation of the
adjustments to GAAP results appears in the table accompanying this
news release. This additional non-GAAP information is not meant to
be considered in isolation or as a substitute for GAAP financials.
The non-GAAP financial information that the Company provides also
may differ from the non-GAAP information provided by other
companies.
In addition, as the Company evaluates certain key items of its
financial results on a local currency basis (i.e., in RMB) in
addition to the reporting currency (i.e., in USD), this news
release contains local currency information that eliminates the
impact of fluctuations in foreign currency exchange rates. The
Company believes that, given its operations primarily based in
China, providing local currency
information on such key items enhances the understanding of its
financial results and evaluation of performance in comparison to
prior periods. Changes in local currency percentages are calculated
by comparing financial results denominated in RMB from period to
period.
Safe Harbor Statement
This news release may contain certain "forward-looking
statements" relating to the business of China Biologic Products
Holdings, Inc. and its subsidiaries. All statements, other than
statements of historical fact included herein, are "forward-looking
statements." These forward-looking statements are often identified
by the use of forward-looking terminology such as "intend,"
"believe," "expect," "are expected to," "will," or similar
expressions, and involve known and unknown risks and uncertainties.
Among other things, the Company's plans regarding the construction
and operation of plasma collection stations, the commercial launch
of pipeline products and the integration with TianXinFu, as well as
the management's quotations and forecast of the Company's financial
performance in this news release contain forward-looking
statements. Although the Company believes that the expectations
reflected in these forward-looking statements are reasonable, they
involve assumptions, risks, and uncertainties, and these
expectations may prove to be incorrect.
Investors should not place undue reliance on these
forward-looking statements, which speak only as of the date of this
news release. The Company's actual results could differ materially
from those anticipated in these forward-looking statements as a
result of a variety of factors, including, without limitation,
quality of purchased source plasma, potential delay or failure to
complete construction of new collection facilities, potential
inability to pass government inspection and certification process
for existing and new facilities, potential inability to achieve the
designed collection capacities at the new collection facilities,
potential inability to achieve the expected operating and financial
performance, potential inability to find alternative sources of
plasma, potential inability to increase production at permitted
sites, potential inability to mitigate the financial consequences
of a temporarily reduced raw plasma supply through cost cutting or
other efficiencies, and potential additional regulatory
restrictions on its operations and those additional risks and
uncertainties discussed in the Company's periodic reports that are
filed with the Securities and Exchange Commission and available on
its website (http://www.sec.gov). All forward-looking statements
attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by these factors. Other than
as required under the securities laws, the Company does not assume
a duty to update these forward-looking statements.
Contact:
China Biologic Products Holdings, Inc.
Mr. Ming Yin
Senior Vice President
Phone: +86-10-6598-3099
E-mail: ir@chinabiologic.com
ICR Inc.
Mr. Bill Zima
Phone: +1-646-405-5191
E-mail: bill.zima@icrinc.com
(Financial statements on the following pages)
CHINA BIOLOGIC
PRODUCTS HOLDINGS, INC. AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
|
For the Six Months
Ended
|
|
June 30,
2018
|
|
June 30,
2017
|
|
June 30,
2018
|
|
June 30,
2017
|
|
USD
|
|
USD
|
|
USD
|
|
USD
|
Sales:
|
120,377,293
|
|
89,277,897
|
|
232,842,183
|
|
180,731,009
|
Human Albumin
|
38,134,120
|
|
32,375,022
|
|
71,930,081
|
|
69,233,313
|
Human Immunoglobulin for Intravenous
Injection
|
28,111,148
|
|
29,663,496
|
|
59,896,369
|
|
61,416,482
|
Other Immunoglobulin products
|
15,405,847
|
|
12,709,939
|
|
28,425,404
|
|
21,003,606
|
Placenta Polypeptide
|
17,013,150
|
|
9,225,786
|
|
33,107,795
|
|
19,472,755
|
Artificial Dura Mater
|
12,815,856
|
|
-
|
|
22,759,839
|
|
-
|
Others
|
8,897,172
|
|
5,303,654
|
|
16,722,695
|
|
9,604,853
|
|
|
|
|
|
|
|
|
Cost of
sales
|
37,638,545
|
|
30,110,272
|
|
71,330,228
|
|
62,325,745
|
Gross
profit
|
82,738,748
|
|
59,167,625
|
|
161,511,955
|
|
118,405,264
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Selling expenses
|
24,352,111
|
|
3,577,599
|
|
45,047,326
|
|
7,385,151
|
General and administrative expenses
|
20,583,026
|
|
14,264,476
|
|
37,970,101
|
|
29,521,242
|
Research and development expenses
|
1,945,921
|
|
1,924,671
|
|
3,662,875
|
|
3,282,034
|
Income from
operations
|
35,857,690
|
|
39,400,879
|
|
74,831,653
|
|
78,216,837
|
|
|
|
|
|
|
|
|
Other income
(expenses)
|
|
|
|
|
|
|
|
Equity in income of an equity method
investee
|
430,509
|
|
972,359
|
|
1,498,554
|
|
1,884,102
|
Interest expense
|
(68,109)
|
|
(286,358)
|
|
(135,673)
|
|
(348,868)
|
Interest income
|
3,237,207
|
|
1,617,054
|
|
6,241,136
|
|
3,240,893
|
Fair value changes of financial instruments
|
1,341,402
|
|
-
|
|
2,626,465
|
|
-
|
Total other income,
net
|
4,941,009
|
|
2,303,055
|
|
10,230,482
|
|
4,776,127
|
|
|
|
|
|
|
|
|
Income before income
tax expense
|
40,798,699
|
|
41,703,934
|
|
85,062,135
|
|
82,992,964
|
|
|
|
|
|
|
|
|
Income tax
expense
|
6,743,682
|
|
6,867,434
|
|
13,451,137
|
|
13,817,973
|
|
|
|
|
|
|
|
|
Net income
|
34,055,017
|
|
34,836,500
|
|
71,610,998
|
|
69,174,991
|
|
|
|
|
|
|
|
|
Less: Net income
attributable to noncontrolling interest
|
5,412,147
|
|
3,806,016
|
|
11,383,051
|
|
8,152,658
|
|
|
|
|
|
|
|
|
Net income
attributable to China Biologic Products Holdings, Inc.
|
28,642,870
|
|
31,030,484
|
|
60,227,947
|
|
61,022,333
|
|
|
|
|
|
|
|
|
Earnings per share of
ordinary share:
|
|
|
|
|
|
|
|
Basic
|
0.84
|
|
1.10
|
|
1.76
|
|
2.17
|
Diluted
|
0.83
|
|
1.09
|
|
1.75
|
|
2.15
|
Weighted average
shares used in computation:
|
|
|
|
|
|
|
|
Basic
|
33,213,938
|
|
27,213,984
|
|
33,187,923
|
|
27,199,011
|
Diluted
|
33,345,062
|
|
27,478,935
|
|
33,347,605
|
|
27,472,301
|
|
|
|
|
|
|
|
|
Net income
|
34,055,017
|
|
34,836,500
|
|
71,610,998
|
|
69,174,991
|
|
|
|
|
|
|
|
|
Other comprehensive
income:
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment, net of nil income taxes
|
(43,595,004)
|
|
10,692,318
|
|
(11,801,779)
|
|
13,413,286
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
(9,539,987)
|
|
45,528,818
|
|
59,809,219
|
|
82,588,277
|
|
|
|
|
|
|
|
|
Less: Comprehensive
income attributable to noncontrolling interest
|
508,757
|
|
4,859,899
|
|
9,872,451
|
|
9,510,461
|
|
|
|
|
|
|
|
|
Comprehensive income
attributable to China Biologic Products Holdings, Inc.
|
(10,048,744)
|
|
40,668,919
|
|
49,936,768
|
|
73,077,816
|
|
|
|
|
|
|
|
|
CHINA BIOLOGIC
PRODUCTS HOLDINGS, INC. AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
June 30,
2018
|
|
December 31,
2017
|
|
|
USD
|
|
USD
|
ASSETS
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and
cash equivalents
|
|
103,299,204
|
|
219,336,848
|
Time
deposits
|
|
118,272,768
|
|
22,895,200
|
Financial instruments
|
|
144,601,301
|
|
-
|
Accounts
receivable, net of allowance for doubtful accounts
|
|
105,802,083
|
|
77,267,275
|
Loan
receivable - current
|
|
-
|
|
45,912,000
|
Inventories
|
|
230,257,973
|
|
209,570,835
|
Prepayments and
other current assets, net of allowance for
doubtful accounts
|
|
26,233,100
|
|
18,139,453
|
Total Current Assets
|
|
728,466,429
|
|
593,121,611
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
182,744,108
|
|
166,812,749
|
Intangible assets,
net
|
|
59,629,211
|
|
536,338
|
Land use rights,
net
|
|
28,838,934
|
|
24,853,163
|
Equity method
investment
|
|
16,161,541
|
|
14,903,908
|
Loan receivable -
non-current
|
|
45,342,000
|
|
-
|
Goodwill
|
|
329,364,009
|
|
-
|
Other non-current
assets
|
|
10,371,424
|
|
8,829,648
|
Total Assets
|
|
1,400,917,656
|
|
809,057,417
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts
payable
|
|
6,201,994
|
|
7,548,909
|
Income
tax payable
|
|
13,313,019
|
|
14,258,544
|
Other
payables and accrued expenses
|
|
97,068,349
|
|
75,827,864
|
Total Current Liabilities
|
|
116,583,362
|
|
97,635,317
|
|
|
|
|
|
Deferred
income
|
|
3,181,686
|
|
3,476,877
|
Non-current income
tax payable
|
|
33,817,138
|
|
37,067,138
|
Other
liabilities
|
|
13,827,349
|
|
6,553,088
|
Total Liabilities
|
|
167,409,535
|
|
144,732,420
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
Ordinary
share:
|
|
|
|
|
par value $0.0001;
|
|
|
|
|
100,000,000 shares authorized;
|
|
|
|
|
35,498,338 and 29,866,545 shares issued at June 30, 2018
and
December 31, 2017,
respectively;
|
|
|
|
|
33,243,634 and 27,611,841 shares outstanding at June 30, 2018
and December 31, 2017,
respectively
|
|
3,550
|
|
2,987
|
Additional paid-in capital
|
|
595,732,735
|
|
140,230,395
|
Treasury share:
2,254,704 shares at June 30, 2018 and December
31, 2017, respectively, at cost
|
|
(56,425,094)
|
|
(56,425,094)
|
Retained
earnings
|
|
566,654,383
|
|
506,426,436
|
Accumulated other comprehensive income
|
|
(2,333,875)
|
|
7,957,304
|
Total equity attributable to China Biologic
Products
Holdings, Inc.
|
|
1,103,631,699
|
|
598,192,028
|
|
|
|
|
|
Noncontrolling interest
|
|
129,876,422
|
|
66,132,969
|
|
|
|
|
|
Total Shareholders'
Equity
|
|
1,233,508,121
|
|
664,324,997
|
|
|
|
|
|
Commitments and contingencies
|
|
-
|
|
-
|
|
|
|
|
|
Total Liabilities and Shareholders'
Equity
|
|
1,400,917,656
|
|
809,057,417
|
|
|
|
|
|
|
|
|
|
|
Note: "Ordinary
share" when used with respect to a date before July 21, 2017 refers
to the common stock of our predecessor,
China Biologic Products, Inc.
|
CHINA BIOLOGIC
PRODUCTS HOLDINGS, INC. AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH
FLOWS
|
|
|
|
|
|
|
|
For the Six Months
Ended
|
|
|
June 30,
|
|
June 30,
|
|
|
2018
|
|
2017
|
|
|
USD
|
|
USD
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net
income
|
|
71,610,998
|
|
69,174,991
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation
|
|
6,577,959
|
|
6,043,854
|
Amortization
|
|
5,149,167
|
|
683,276
|
Loss on sale of
property, plant and equipment
|
|
98,555
|
|
119,557
|
Fair value changes of
financial instruments
|
|
(2,626,465)
|
|
-
|
Allowance (reversal)
for doubtful accounts - accounts receivable, net
|
|
(4,703)
|
|
23,783
|
Deferred tax
benefit
|
|
(4,314,498)
|
|
(166,369)
|
Share-based
compensation
|
|
19,846,826
|
|
16,201,189
|
Equity in income of
an equity method investee
|
|
(1,498,554)
|
|
(1,884,102)
|
Change in operating
assets and liabilities:
|
|
|
|
|
Accounts
receivable
|
|
(30,298,478)
|
|
(26,068,071)
|
Inventories
|
|
(21,365,581)
|
|
(22,769,252)
|
Prepayments and other
current assets
|
|
(8,339,852)
|
|
(1,862,700)
|
Accounts
payable
|
|
(1,321,840)
|
|
33,359
|
Income tax
payable
|
|
(1,747,739)
|
|
519,895
|
Other payables and
accrued expenses
|
|
17,286,649
|
|
(2,910,237)
|
Deferred
income
|
|
(261,672)
|
|
(242,713)
|
Non-current income
tax payable
|
|
(3,250,000)
|
|
-
|
Net cash provided
by operating activities
|
|
45,540,772
|
|
36,896,460
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Cash acquired from
acquisition of Tianxinfu
|
|
97,702,278
|
|
-
|
Purchase of time
deposit
|
|
(206,656,231)
|
|
-
|
Maturity of time
deposit
|
|
108,029,200
|
|
-
|
Purchase of financial
instruments
|
|
(322,948,071)
|
|
-
|
Maturity of financial
instruments
|
|
174,086,107
|
|
-
|
Payment for property,
plant and equipment
|
|
(18,443,583)
|
|
(15,975,643)
|
Payment for
intangible assets and land use rights
|
|
(700,720)
|
|
(667,068)
|
Proceeds from sale of
property, plant and equipment
|
|
17,562
|
|
24,674
|
Net cash used in
investing activities
|
|
(168,913,458)
|
|
(16,618,037)
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from stock
option exercised
|
|
766,906
|
|
506,239
|
Proceeds from
short-term bank loans
|
|
-
|
|
23,009,280
|
Repayment of
short-term bank loan
|
|
-
|
|
(8,715,000)
|
Net cash provided
by financing activities
|
|
766,906
|
|
14,800,519
|
|
|
|
|
|
EFFECT OF FOREIGN
EXCHANGE RATE CHANGES ON CASH
|
|
6,568,136
|
|
4,399,014
|
|
|
|
|
|
NET INCREASE IN
CASH AND CASH EQUIVALENTS
|
|
(116,037,644)
|
|
39,477,956
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period
|
|
219,336,848
|
|
183,765,533
|
|
|
|
|
|
Cash and cash
equivalents at end of period
|
|
103,299,204
|
|
223,243,489
|
|
|
|
|
|
Supplemental cash
flow information
|
|
|
|
|
Cash paid for income
taxes
|
|
23,356,958
|
|
13,621,188
|
Noncash investing and
financing activities:
|
|
|
|
|
Acquisition of
property, plant and equipment included in payables
|
|
5,028,782
|
|
4,202,934
|
Issuance of ordinary
shares in connection with the Tianxinfu acquisition
|
|
434,889,170
|
|
-
|
|
|
|
|
|
CHINA BIOLOGIC
PRODUCTS HOLDINGS, INC. AND SUBSIDIARIES
|
RECONCILIATION OF
NON-GAAP FINANCIAL MEASURES
|
|
|
|
|
|
|
|
|
|
For the Three Months
Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2018
|
|
2017
|
|
|
|
USD
|
|
USD
|
Income from
Operations
|
|
|
35,857,690
|
|
39,400,879
|
Non-cash employee
stock compensation
|
|
|
10,837,592
|
|
8,129,124
|
Amortization of
acquired intangible assets and land use rights
|
|
2,472,350
|
|
-
|
Adjusted Income
from Operations - Non GAAP
|
|
|
49,167,632
|
|
47,530,003
|
|
|
|
|
|
|
Net Income
Attributable to the Company
|
|
|
28,642,870
|
|
31,030,484
|
Non-cash employee
stock compensation
|
|
|
9,914,207
|
|
7,475,563
|
Amortization of
acquired intangible assets and land use rights
|
|
1,681,198
|
|
-
|
Adjusted Net Income
Attributable to the Company - Non GAAP
|
|
40,238,275
|
|
38,506,047
|
Diluted EPS - Non
GAAP
|
|
|
1.17
|
|
1.35
|
|
|
|
|
|
|
Weighted average
number of shares used in computation of Non GAAP diluted
EPS
|
|
33,345,062
|
|
27,478,935
|
|
|
|
|
|
|
|
|
|
For the Six Months
Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2018
|
|
2017
|
|
|
|
USD
|
|
USD
|
Income from
Operations
|
|
|
74,831,653
|
|
78,216,837
|
Non-cash employee
stock compensation
|
|
|
19,846,826
|
|
16,201,189
|
Amortization of
acquired intangible assets and land use rights
|
|
4,629,652
|
|
-
|
Adjusted Income from
Operations - Non GAAP
|
|
|
99,308,131
|
|
94,418,026
|
|
|
|
|
|
|
Net Income
Attributable to the Company
|
|
|
60,227,947
|
|
61,022,333
|
Non-cash employee
stock compensation
|
|
|
18,176,844
|
|
14,913,802
|
Amortization of
acquired intangible assets and land use rights
|
|
3,148,163
|
|
-
|
Adjusted Net Income
Attributable to the Company - Non GAAP
|
|
81,552,954
|
|
75,936,135
|
Diluted EPS - Non
GAAP
|
|
|
2.37
|
|
2.67
|
|
|
|
|
|
|
Weighted average
number of shares used in computation of Non GAAP diluted
EPS
|
|
33,347,605
|
|
27,472,301
|
View original
content:http://www.prnewswire.com/news-releases/china-biologic-reports-financial-results-for-the-second-quarter-of-2018-300691645.html
SOURCE China Biologic Products Holdings, Inc.