3Q18 Total Sales Up 21.9% YoY in RMB terms, or
19.6% YoY in USD terms;
Non-GAAP Adjusted Net Income Down 12.7% YoY in
RMB terms;
Net Income Up 4.1% YoY to $32.9 Million
Board of Directors Approves $100 Million Share Repurchase Program
BEIJING, Nov. 1, 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 third quarter of 2018.
Third Quarter 2018 Financial Highlights
- Total sales in the third quarter of 2018 increased by
21.9% in RMB terms and 19.6% in USD terms to $119.1 million from $99.6
million in the same quarter of 2017.
- Gross profit increased by 21.0% to $81.2 million from $67.1
million in the same quarter of 2017. Gross margin
increased to 68.2% from 67.4% in the same quarter of 2017.
- Income from operations decreased by 23.1% in RMB terms,
and 24.5% in USD terms to $28.7
million from $38.0 million in
the same quarter of 2017. Operating margin decreased to
24.1% from 38.2% in the same quarter of 2017. Excluding
TianXinFu, income from operations decreased by 34.8% in RMB
terms and 36.1% in USD terms in the third quarter of 2018 compared
to the same quarter of 2017, and operating margin decreased
to 22.6% from 38.2% in the same quarter of 2017.
- Non-GAAP adjusted income from operations decreased by
15.6% in RMB terms and 17.4% in USD terms to $38.5 million from $46.6
million in the same quarter of 2017. Excluding TianXinFu,
non-GAAP adjusted income from operations decreased by 29.5% in
RMB terms and 30.9% in USD terms in the third quarter of 2018
compared to the same quarter of 2017.
- Net income attributable to the Company
increased by 6.3% in RMB terms and 4.1% in USD terms to
$32.9 million from $31.6 million in the same quarter of 2017.
Fully diluted earnings per share
decreased by 15.3% to $0.94 compared
to $1.11 in the same quarter of 2017.
Excluding TianXinFu, net income attributable to
the Company decreased by 5.7% in RMB terms and 7.6% in USD
terms in the third quarter of 2018 compared to the same quarter of
2017.
- Non-GAAP adjusted net income attributable to the Company
decreased by 12.7% in RMB terms and 14.5% in USD terms to
$33.7 million from $39.4 million in the same quarter of 2017.
Non-GAAP adjusted earnings per share decreased
to $0.96 from $1.38 in the same quarter of 2017. Excluding
TianXinFu, non-GAAP adjusted net income attributable to the
Company decreased by 25.8% in RMB terms and 27.4% in USD terms
in the third 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.
"In line with our previously revised forecast for the full year
2018, our results in the third quarter reflected the impact of
ongoing regulatory changes and
intensified competition in China's
plasma industry," said China Biologic Chairman David Hui Li. "We were, however, pleased to make
significant progress in both attracting industry talent and
strengthening our sales and
marketing efforts. I am confident that we now have the right
corporate direction, product strategy and management team in place
to build a world class biopharmaceutical and biotechnology company,
with a leading position in key therapeutic areas. Our future growth
will benefit from China's rapidly
growing health care market, as well as our exploration of
opportunities for expansion in international markets."
"In the third quarter, we were excited to announce the
appointment of Dr. Bing Li as our new CEO. With Dr. Li's deep
industry experience and leadership, China
Biologic is well positioned to further improve our
governance and management systems as we upgrade our internal
capabilities and explore strategic acquisitions to enhance both our
portfolio of high growth products and our sales and marketing
capabilities."
Dr. Bing Li, CEO of China Biologic, said, "In the third quarter
of 2018, we made progress on strengthening China Biologic's commercial
capabilities through the recruitment of several industry veterans
to our sales and marketing team. As
an industry leader, China Biologic will continue to educate Chinese
doctors about the benefits of IVIG, PCC and other coagulation
products in treating chronic patients across a wide range of
clinical indications, as we see strong growth potential in this
underdeveloped industry segment. We have also taken further steps
to improve the Company's corporate governance and improve important
aspects of operation, with new hires in leadership roles expected
to be on board by the end of the year. As part of our core strategy, we are actively
pursuing suitable M&A targets that will position China Biologic
for long-term growth."
"Looking into the fourth quarter and beyond, our new sales and
marketing talent will be dedicated to expanding sales coverage and
deepening penetration at the hospital level. These efforts will
help decrease the inventory
position of our products, which is currently at higher than normal
levels, both internally and with our distributors."
Share Repurchase Program
The company today announced that its Board of Directors has
authorized a share repurchase program under which China Biologic
may repurchase up to US$100 million worth of shares over
the next 6 months.
The Company's repurchases may be made from time to time on the
open market at prevailing market prices, in negotiated transactions
off the market, in block trades or through other legally
permissible means. The timing and extent of any purchases will
depend upon market conditions, the trading price of its shares and
other factors, and are subject to the restrictions relating to
volume, price and timing under applicable law.
Third Quarter 2018 Financial Performance
Total sales in the third quarter of 2018 increased by
21.9% in RMB terms, or 19.6% in USD terms, to $119.1 million from $99.6
million in the same quarter of 2017. The increase in total
sales was partly attributable to an $11.5
million contribution from TianXinFu, which accounted for
approximately 9.7% of total sales for the quarter. Excluding
TianXinFu, total sales in the third quarter of 2018 increased by
10.2% 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 third quarter of 2018 increased by
6.7% in RMB terms, or 4.6% in USD terms, to $88.4 million from $84.5
million in the same quarter of 2017.
During the third quarter of 2018, human albumin and IVIG
products remained the Company's two largest sales contributors.
Revenue from human albumin increased by 20.6% in RMB terms, or
18.3% in USD terms, from $32.8
million in the third quarter of 2017 to $38.8 million in the third quarter of 2018.
Revenue from IVIG products decreased by 19.6% in RMB terms, or
21.2% in USD terms, from $30.7
million in the third quarter of 2017 to $24.2 million in the third quarter of 2018. As a
percentage of total sales, sales from human albumin and IVIG
products were 32.6% and 20.3%, respectively, in the third quarter
of 2018. Excluding the contribution from TianXinFu, human albumin
and IVIG products represented 36.1% and 22.5% of total sales,
respectively, compared to 33.0% and 30.9%, respectively, in the
third 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 28.8%
for the third 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 17.6% for the third 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 6.4% and 2.5%, respectively, in RMB terms in the third quarter
of 2018 compared to the same quarter of 2017 because of greater
sales volume in the distributor channel and lower prices to certain
distributors reflecting intensified market competition for major
plasma products. In USD terms, the average price for human albumin
and IVIG products decreased by 8.2% and 4.3% year over year,
respectively.
Revenue from specialty immunoglobulin products increased by
21.8% in RMB terms, or 19.5% in USD terms, in the third quarter of
2018 compared to the same quarter of 2017, reaching 14.9% of total
sales. This increase was mainly due to higher sales volumes of
human tetanus immunoglobulin products and human rabies
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 27.1% in
RMB terms, or 24.6% in USD terms, in the third quarter of 2018
compared to the same quarter of 2017, representing 6.4% of total
sales. The growth mainly came from the launch of our human
fibrinogen products in the beginning of 2018.
Revenue from placenta polypeptide products increased by 30.2% in
RMB terms, or 27.7% in USD terms, in the third quarter of 2018
compared to the same quarter of 2017, reaching 16.1% 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 17.0% to $37.9 million in the third quarter of 2018
compared to the same quarter of 2017. As a percentage of total
sales, cost of sales decreased to 31.8% from 32.6% 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 increased to 33.4% of total
sales, mainly because of lower sales prices for its human albumin
and IVIG products, which was partly offset by a higher sales price
for the Company's placenta polypeptide product.
Gross profit increased by 21.0% to $81.2 million in the third quarter of 2018 from
$67.1 million in the same quarter of
2017. Gross margin was 68.2% and 67.4% in the third quarters
of 2018 and 2017, respectively.
Total operating expenses in the third quarter of 2018 was
$52.5 million compared to
$29.1 million in the same quarter of
2017. As a percentage of total sales, total operating expenses
increased to 44.1% in the third quarter of 2018 from 29.2% in the
same quarter of 2017. Excluding TianXinFu, total operating expenses
increased by $18.3 million, or 62.9%,
to $47.4 million in the third quarter
of 2018. This increase mainly consisted of an increase of
$13.1 million in selling expenses and
an increase of $4.1 million in
general and administrative expenses, excluding TianXinFu.
Selling expenses in the third quarter of 2018 was
$27.4 million compared to
$10.3 million in the same quarter of
2017. Approximately 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 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 21.4% of total sales in the third quarter of 2018
compared to 10.4% in the same quarter of 2017.
General and administrative expenses in the third quarter
of 2018 was $22.2 million compared to
$17.4 million in the same quarter of
2017. As a percentage of total sales, general and administrative
expenses were 18.6% and 17.5% in the third quarter of 2018 and the
same quarter of 2017, respectively. The increase in general and
administrative expenses largely resulted from increased legal fees
mainly in relation to the lawsuit filed against the Company in the
Cayman Islands by Mr. David (Xiaoying) Gao, the former Chairman and
CEO of the Company whose employment with the Company had previously
been terminated for cause; Shandong Taibang's increased
depreciation expenses and property tax for its new facility; and an
increase of one-time provisions in connection with certain fixed
assets among certain non-operating collection stations, which was
partly offset by a decrease in share-based compensation expenses
for the third quarter of 2018 compared to same quarter of 2017.
Research and development expenses in the third quarter of
2018 was $2.9 million compared to
$1.4 million in the same quarter of
2017. As a percentage of total sales, research and development
expenses increased to 2.4% in the third quarter of 2018 from 1.4%
in the same quarter of 2017.
Income from operations for the third quarter of 2018
decreased by 23.1% in RMB terms, or 24.5% in USD terms, to
$28.7 million from $38.0 million in the same quarter of 2017.
Operating margin decreased to 24.1% in the third quarter of
2018 from 38.2% in the same quarter of 2017. Excluding
TianXinFu, income from operations for the third quarter
of 2018 decreased by 34.8% in RMB terms, or 36.1% in USD terms, to
$24.3 million, and operating margin
decreased to 22.6%.
Income tax benefit was $3.6
million for the third quarter of 2018 compared to an income
tax expense of $5.7 million in the
same quarter of 2017, mainly due to a $7.5
million reversal of U.S. corporate income tax. For the year
ended December 31, 2017, we recorded
a one-time income tax charge of $40.3
million, which represented the management's estimation of
the amount of U.S. corporate income tax based on the deemed
repatriation to the United States
of the Company's accumulated earnings mandated by the new U.S.
income tax law that went into effect on December 22, 2017 (the "U.S. Tax Reform"). Based
on several new regulations and rules issued by the U.S. Department
of the Treasury in August 2018, the
management reassessed the amount and reversed $7.5 million in the third quarter of 2018.
Excluding the tax reversal impact, the effective income tax rate
was 11.5% and 13.8% for the third quarters of 2018 and 2017,
respectively.
Net income attributable to the Company increased
by 6.3% in RMB terms, or 4.1% in USD terms, to $32.9 million
in the third quarter of 2018 from $31.6
million in the same quarter of 2017. Net margin
decreased to 27.6% in the third quarter of 2018 from 31.7% in the
same quarter of 2017. Diluted net earnings per share
decreased to $0.94 in the third
quarter of 2018 compared to $1.11 in
the same quarter of 2017. Excluding TianXinFu, net income
attributable to the Company decreased by 5.7% in RMB terms, or
7.6% in USD terms, in the third quarter of 2018 compared to the
same quarter of 2017, and net margin decreased to 27.1% in
the third quarter of 2018 from 31.7% in the same quarter of
2017.
Non-GAAP adjusted income from operations decreased by
15.6% in RMB terms, or 17.4% in USD terms, to $38.5 million in the third quarter of 2018 from
$46.6 million in the same quarter of
2017. Excluding TianXinFu, non-GAAP adjusted income from
operations decreased by 29.5% in RMB terms, or 30.9% in USD
terms, in the third quarter of 2018 compared to the same quarter of
2017.
Non-GAAP adjusted net income attributable to the Company
decreased by 12.7% in RMB terms and 14.5% in USD terms, to
$33.7 million in the third quarter of
2018 from $39.4 million in the same
quarter of 2017. Non-GAAP net margin decreased to 28.3% in
the third quarter of 2018 from 39.6% in the same quarter of 2017.
Non-GAAP adjusted net income per diluted share decreased to
$0.96 in the third quarter of 2018
from $1.38 in the same quarter of
2017. Excluding TianXinFu, non-GAAP adjusted net income
attributable to the Company decreased by 25.8% in RMB terms, or
27.4% in USD terms, in the third quarter of 2018 compared to the
same quarter of 2017.
Non-GAAP adjusted income from operations for the third
quarter of 2018 excludes $7.8 million
in non-cash employee share-based compensation expenses, and
$2.0 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 third quarter of 2018 exclude $6.9 million in non-cash employee share-based
compensation expenses, $1.4 million
in amortization expense of intangible assets and land use rights
related to the acquisition of TianXinFu, and an income tax benefit
of $7.5 million related to U.S. Tax
Reform.
First Nine Months 2018 Financial Performance
Total sales in the first nine months of 2018 increased by
20.4% in RMB terms, or 25.5% in USD terms, to $351.9 million from $280.3
million in the same period of 2017. This includes a
$35.9 million contribution from
TianXinFu, which accounts for approximately 10.2% of total sales
for the first nine months of 2018. Excluding TianXinFu, total sales
in the first nine months of 2018 increased by 8.1% in RMB terms as
a result of increases in the sales of placenta polypeptide
products, human albumin products, and certain immunoglobulin
products, which was partly offset by decreases in the sales of IVIG
products. For plasma products, total sales in the first nine months
of 2018 increased by 2.8% in RMB terms, or 7.3% in USD terms, to
$263.7 million from $245.8 million in the same period of 2017. As a
percentage of total sales, sales from human albumin products and
IVIG products accounted for 31.5% and 23.9%, respectively, for the
first nine months of 2018. Excluding the contribution from
TianXinFu, human albumin and IVIG products were 35.0% and 26.6% of
total sales, respectively.
Cost of sales increased by 15.2% to $109.2 million in the first nine months of 2018
compared to $94.8 million in the same
period of 2017. As a percentage of total sales, cost of sales
decreased to 31.0% from 33.8% 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 33.1% of total sales, mainly
due to the higher sales price of the Company's placenta polypeptide
product, which was partly offset by lower sales prices for its
human albumin and IVIG products.
Gross profit increased by 30.8% to $242.7 million in the first nine months of 2018
from $185.5 million in the same
period of 2017. Gross margin was 69.0% and 66.2% in the
first nine months of 2018 and 2017, respectively.
Total operating expenses in the first nine months of 2018
was $139.3 million compared to
$69.3 million in the same period of
2017. As a percentage of total sales, total operating expenses
increased to 39.6% in the first nine months of 2018 from 24.7% in
the same period of 2017. Excluding TianXinFu, total operating
expenses increased by $54.6 million,
or 78.8%, to $123.9 million in the
first nine months of 2018. This increase mainly consisted of an
increase of $42.9 million in selling
expenses and an increase of $11.3
million in general and administrative expenses.
Income from operations for the first nine months of 2018
decreased by 15.1% in RMB terms, or 11.0% in USD terms, to
$103.5 million from $116.3 million in the same period of 2017.
Excluding TianXinFu, income from operations for the
first nine months of 2018 decreased by 28.1% in RMB terms, or 24.5%
in USD terms, in the first nine months of 2018 compared to the same
period of 2017.
Income tax expense in the first nine months of 2018
decreased to $9.8 million from
$19.5 million in the same period of
2017. The decrease was mainly because of a reversal of $7.5 million U.S. corporate income tax based on
the deemed repatriation to the United
States of the Company's accumulated earnings mandated by the
U.S. Tax Reform, according to new regulations and rules issued by
the U.S. Department of the Treasury in August 2018. Excluding the tax reversal impact,
the effective income tax rate was 14.6% and 15.7% for the first
nine months of 2018 and 2017, respectively.
Net income attributable to the Company decreased
by 3.5% in RMB terms, and increased slightly by 0.5% in USD terms,
to $93.1 million in the first nine months of 2018 from
$92.6 million in the same period of
2017. Net margin decreased to 26.5% in the first nine months
of 2018 from 33.0% in the same period of 2017. Diluted earnings
per share for the first nine months of 2018 decreased to
$2.66 from $3.25 for the same period of 2017. Excluding
TianXinFu, net income attributable to the Company decreased by
17.1% in RMB terms, or 13.6% in USD terms, in the first nine months
of 2018 compared to the same period of 2017, and net margin
decreased to 25.3%.
Non-GAAP adjusted income from operations decreased by
6.7% in RMB terms, or 2.3% in USD terms, to $137.8 million in the first nine months of 2018
from $141.0 million in the same
period of 2017. Excluding TianXinFu, non-GAAP adjusted income
from operations decreased by 21.9% in RMB terms, or 18.2% in
USD terms in the first nine months of 2018 compared to the same
period of 2017.
Non-GAAP adjusted net income attributable to the Company
decreased by 4.5% in RMB terms, or remained stable in USD terms, at
$115.3 million in the first nine
months of 2018 compared with the same period of 2017. Non-GAAP
adjusted net income per diluted share decreased to $3.29 in the first nine months of 2018 from
$4.05 in the same period of 2017.
Excluding TianXinFu, non-GAAP adjusted net income attributable
to the Company decreased by 19.1% in RMB terms, or 15.4% in USD
terms, in the first nine months of 2018 compared to the same period
of 2017.
Non-GAAP adjusted income from operations for the
first nine months of 2018 excludes $27.7
million in non-cash employee share-based compensation
expenses, $6.6 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 nine months of 2018 exclude $25.1 million in non-cash employee share-based
compensation expenses, $4.5 million
in amortization expense of intangible assets and land use rights
related to the acquisition of TianXinFu, and an income tax benefit
of $7.5 million related to U.S. Tax
Reform.
As of September 30, 2018, the
Company had $186.4 million in cash on
hand and demand deposits, $595.6
million in time deposits, and $171.2
million in financial instruments.
Net cash provided by operating activities for the first
nine months of 2018 was $71.0
million, including a $14.2
million contribution from TianXinFu, compared to
$72.6 million for the same period of
2017. Excluding TianXinFu, the $15.8
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
income 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 nine months of 2017.
Excluding TianXinFu, accounts receivable increased by
$47.7 million during the first nine
months of 2018 compared to $37.8
million in the same period of 2017. The accounts receivable
turnover days for plasma products increased to 94 days during the
first nine months of 2018 from 55 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 $32.4 million in the first nine months of 2018.
This is slightly lower than a $34.0
million inventory increase in the same period of 2017, when
Shandong Taibang stockpiled raw material and WIP during the planned
temporary production suspension.
Excluding TianXinFu, other payables and accrued liabilities
increased by $28.6 million in the
first nine months of 2018 compared to an increase of $9.9 million in the first nine months 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 nine
months of 2018 was $686.2 million
compared to $28.4 million for the
same period of 2017. Net cash used in investing activities in the
first nine months of 2018 mainly consisted of a $1,680.5 million payment for the purchase of time
deposits and financial instruments and a $26.9 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 $923.4 million in
time deposits and financial instruments. In the same period of
2017, the Company paid $28.5 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
nine months of 2018 was $581.3
million compared to net cash used in financing activities of
$18.4 million for the same period of
2017. Net cash provided by financing activities in the first nine
months of 2018 represented $590.3
million proceeds from the issuance and sale of an aggregate
of 5,850,000 ordinary shares of the Company to certain investors in
late third quarter of 2018, and $1.2
million from stock options exercised, partially offset by a
dividend of $10.1 million paid by
Shandong Taibang to its noncontrolling interest shareholders. Net
cash used in financing activities in the first nine months of 2017
mainly consisted of $18.8 million
dividends paid by Shandong Taibang to its noncontrolling interest
shareholders.
Financial Outlook
The Company reiterates its previously revised 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.
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 November 2, 2018, which is 7:30 pm Beijing Time on November 2, 2018, to discuss its third 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 through November 9, 2018. The dial-in details are:
US:
|
1 877 344
7529
|
International:
|
1 412 317
0088
|
Passcode:
|
10125875
|
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, amortization of acquired
intangible assets and land use rights, and an income tax benefit
related to U.S. Tax Reform. 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
Email: ir@chinabiologic.com
The Foote Group
Mr. Philip Lisio
Phone: +86-135-0116-6560
Email: phil@thefootegroup.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 Nine Months
Ended
|
|
September 30,
2018
|
|
September 30,
2017
|
|
September 30,
2018
|
|
September 30,
2017
|
|
USD
|
|
USD
|
|
USD
|
|
USD
|
Sales:
|
119,106,754
|
|
99,561,251
|
|
351,948,937
|
|
280,292,260
|
Human Albumin
|
38,820,347
|
|
32,814,153
|
|
110,750,427
|
|
102,047,466
|
Human Immunoglobulin for Intravenous
Injection
|
24,231,787
|
|
30,724,570
|
|
84,128,156
|
|
92,141,052
|
Other Immunoglobulin products
|
17,754,624
|
|
14,855,226
|
|
46,180,028
|
|
35,858,831
|
Placenta Polypeptide
|
19,203,232
|
|
15,037,482
|
|
52,311,027
|
|
34,510,237
|
Artificial Dura Mater
|
9,976,001
|
|
-
|
|
32,735,840
|
|
-
|
Others
|
9,120,763
|
|
6,129,820
|
|
25,843,459
|
|
15,734,674
|
|
|
|
|
|
|
|
|
Cost of
sales
|
37,874,952
|
|
32,424,522
|
|
109,205,180
|
|
94,750,267
|
Gross
profit
|
81,231,802
|
|
67,136,729
|
|
242,743,757
|
|
185,541,993
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
Selling expenses
|
27,441,971
|
|
10,311,284
|
|
72,489,297
|
|
17,696,435
|
General and administrative expenses
|
22,195,036
|
|
17,369,133
|
|
60,165,137
|
|
46,890,375
|
Research and development expenses
|
2,898,115
|
|
1,409,226
|
|
6,560,990
|
|
4,691,260
|
Income from
operations
|
28,696,680
|
|
38,047,086
|
|
103,528,333
|
|
116,263,923
|
|
|
|
|
|
|
|
|
Other income
(expenses)
|
|
|
|
|
|
|
|
Equity in income of an equity method
investee
|
521,213
|
|
1,114,784
|
|
2,019,767
|
|
2,998,886
|
Interest expense
|
(64,563)
|
|
(129,787)
|
|
(200,236)
|
|
(478,655)
|
Interest income
|
3,705,168
|
|
1,781,576
|
|
9,946,304
|
|
5,022,469
|
Fair value changes of financial instruments
|
1,181,400
|
|
-
|
|
3,807,865
|
|
-
|
Total other income,
net
|
5,343,218
|
|
2,766,573
|
|
15,573,700
|
|
7,542,700
|
|
|
|
|
|
|
|
|
Income before income
tax expense
|
34,039,898
|
|
40,813,659
|
|
119,102,033
|
|
123,806,623
|
|
|
|
|
|
|
|
|
Income tax
expense
|
(3,614,695)
|
|
5,650,621
|
|
9,836,443
|
|
19,468,594
|
|
|
|
|
|
|
|
|
Net income
|
37,654,593
|
|
35,163,038
|
|
109,265,590
|
|
104,338,029
|
|
|
|
|
|
|
|
|
Less: Net income
attributable to noncontrolling interest
|
4,733,252
|
|
3,597,923
|
|
16,116,303
|
|
11,750,581
|
|
|
|
|
|
|
|
|
Net income
attributable to China Biologic Products Holdings, Inc.
|
32,921,341
|
|
31,565,115
|
|
93,149,287
|
|
92,587,448
|
|
|
|
|
|
|
|
|
Earnings per share of
ordinary share:
|
|
|
|
|
|
|
|
Basic
|
0.94
|
|
1.11
|
|
2.67
|
|
3.28
|
Diluted
|
0.94
|
|
1.11
|
|
2.66
|
|
3.25
|
Weighted average
shares used in computation:
|
|
|
|
|
|
|
|
Basic
|
33,973,834
|
|
27,430,784
|
|
33,937,057
|
|
27,277,823
|
Diluted
|
34,077,426
|
|
27,657,806
|
|
34,078,243
|
|
27,535,624
|
|
|
|
|
|
|
|
|
Net income
|
37,654,593
|
|
35,163,038
|
|
109,265,590
|
|
104,338,029
|
|
|
|
|
|
|
|
|
Other comprehensive
income:
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment, net of nil income taxes
|
(52,258,441)
|
|
11,305,814
|
|
(64,060,220)
|
|
24,719,100
|
|
|
|
|
|
|
|
|
Comprehensive
income
|
(14,603,848)
|
|
46,468,852
|
|
45,205,370
|
|
129,057,129
|
|
|
|
|
|
|
|
|
Less: Comprehensive
income attributable to noncontrolling interest
|
(1,294,335)
|
|
4,836,621
|
|
8,578,116
|
|
14,347,082
|
|
|
|
|
|
|
|
|
Comprehensive income
attributable to China Biologic Products Holdings, Inc.
|
(13,309,513)
|
|
41,632,231
|
|
36,627,254
|
|
114,710,047
|
CHINA BIOLOGIC
PRODUCTS HOLDINGS, INC. AND SUBSIDIARIES
|
UNAUDITED
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
September 30,
2018
|
|
December 31,
2017
|
|
|
USD
|
|
USD
|
ASSETS
|
|
|
|
|
Current
Assets
|
|
|
|
|
Cash and
cash equivalents
|
|
186,415,243
|
|
219,336,848
|
Time
deposits
|
|
595,605,010
|
|
22,895,200
|
Financial instruments
|
|
171,181,058
|
|
-
|
Accounts
receivable, net of allowance for doubtful accounts
|
|
117,768,996
|
|
77,267,275
|
Loan
receivable - current
|
|
-
|
|
45,912,000
|
Inventories
|
|
234,106,644
|
|
209,570,835
|
Prepayments and other current assets, net of allowance for
doubtful
accounts
|
|
29,513,540
|
|
18,139,453
|
Total Current Assets
|
|
1,334,590,491
|
|
593,121,611
|
|
|
|
|
|
Property, plant and
equipment, net
|
|
177,737,929
|
|
166,812,749
|
Intangible assets,
net
|
|
54,341,019
|
|
536,338
|
Land use rights,
net
|
|
27,400,023
|
|
24,853,163
|
Equity method
investment
|
|
15,041,973
|
|
14,903,908
|
Loan receivable -
non-current
|
|
40,991,531
|
|
-
|
Goodwill
|
|
312,878,547
|
|
-
|
Other non-current
assets
|
|
11,386,252
|
|
8,829,648
|
Total Assets
|
|
1,974,367,765
|
|
809,057,417
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
Liabilities
|
|
|
|
|
Accounts
payable
|
|
7,152,500
|
|
7,548,909
|
Income
tax payable
|
|
11,848,817
|
|
14,258,544
|
Other
payables and accrued expenses
|
|
105,296,794
|
|
75,827,864
|
Total Current Liabilities
|
|
124,298,111
|
|
97,635,317
|
|
|
|
|
|
Deferred
income
|
|
2,939,018
|
|
3,476,877
|
Non-current income
tax payable
|
|
26,899,038
|
|
37,067,138
|
Other
liabilities
|
|
12,946,520
|
|
6,553,088
|
Total Liabilities
|
|
167,082,687
|
|
144,732,420
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
Ordinary
share:
|
|
|
|
|
par value $0.0001;
|
|
|
|
|
100,000,000 shares authorized;
|
|
|
|
|
41,616,020 and 29,866,545 shares issued at
September 30, 2018 and
December 31, 2017, respectively;
|
|
|
|
|
39,361,316 and 27,611,841 shares outstanding at
September 30, 2018 and
December 31, 2017, respectively
|
|
4,162
|
|
2,987
|
Additional paid-in capital
|
|
1,194,258,324
|
|
140,230,395
|
Treasury
share: 2,254,704 shares at September 30, 2018 and December31,
2017, respectively, at cost
|
|
(56,425,094)
|
|
(56,425,094)
|
Retained
earnings
|
|
599,575,723
|
|
506,426,436
|
Accumulated other comprehensive income
|
|
(48,564,729)
|
|
7,957,304
|
Total equity attributable to China
Biologic Products Holdings, Inc.
|
|
1,688,848,386
|
|
598,192,028
|
|
|
|
|
|
Noncontrolling interest
|
|
118,436,692
|
|
66,132,969
|
|
|
|
|
|
Total Shareholders'
Equity
|
|
1,807,285,078
|
|
664,324,997
|
|
|
|
|
|
Commitments and contingencies
|
|
-
|
|
-
|
|
|
|
|
|
Total Liabilities and Shareholders'
Equity
|
|
1,974,367,765
|
|
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 Nine Months
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
2018
|
|
2017
|
|
|
USD
|
|
USD
|
CASH FLOWS FROM
OPERATING ACTIVITIES:
|
|
|
|
|
Net
income
|
|
109,265,590
|
|
104,338,029
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
Depreciation
|
|
10,809,288
|
|
9,154,528
|
Amortization
|
|
7,391,494
|
|
948,945
|
Loss on sale of
property, plant and equipment
|
|
119,658
|
|
136,496
|
Fair value changes of
financial instruments
|
|
(3,807,868)
|
|
-
|
Allowance for
doubtful accounts - accounts receivable, net
|
|
1,125,569
|
|
23,783
|
Write-down of
obsolete inventories
|
|
428,741
|
|
-
|
Impairment for
non-current assets
|
|
777,946
|
|
-
|
Deferred tax
benefit
|
|
(6,119,956)
|
|
(1,770,326)
|
Share-based
compensation
|
|
27,694,079
|
|
24,715,534
|
Equity in income of
an equity method investee
|
|
(2,019,767)
|
|
(2,998,886)
|
Change in operating
assets and liabilities:
|
|
|
|
|
Accounts
receivable
|
|
(47,682,569)
|
|
(37,784,029)
|
Inventories
|
|
(34,667,723)
|
|
(34,030,811)
|
Prepayments and other
current assets
|
|
(11,583,687)
|
|
(1,840,311)
|
Accounts
payable
|
|
2,611,758
|
|
(88,625)
|
Income tax
payable
|
|
(2,717,011)
|
|
2,690,364
|
Other payables and
accrued expenses
|
|
30,565,526
|
|
9,432,501
|
Deferred
income
|
|
(384,334)
|
|
(367,750)
|
Non-current income
tax payable
|
|
(10,769,674)
|
|
-
|
Net cash provided
by operating activities
|
|
71,037,060
|
|
72,559,442
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES:
|
|
|
|
|
Cash acquired from
acquisition of Tianxinfu
|
|
97,702,278
|
|
-
|
Purchase of time
deposit
|
|
(1,116,354,557)
|
|
-
|
Maturity of time
deposit
|
|
536,098,566
|
|
-
|
Purchase of financial
instruments
|
|
(564,125,165)
|
|
-
|
Maturity of financial
instruments
|
|
387,319,807
|
|
-
|
Payment for property,
plant and equipment
|
|
(26,193,022)
|
|
(27,755,853)
|
Payment for
intangible assets and land use rights
|
|
(700,458)
|
|
(733,513)
|
Proceeds from sale of
property, plant and equipment
|
|
26,785
|
|
46,264
|
Net cash used in
investing activities
|
|
(686,225,766)
|
|
(28,443,102)
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES:
|
|
|
|
|
Proceeds from stock
option exercised
|
|
1,180,854
|
|
836,897
|
Proceeds from
short-term bank loans
|
|
-
|
|
23,009,280
|
Repayment of
short-term bank loan
|
|
-
|
|
(23,412,060)
|
Proceeds from the
issuance and sale of ordinary shares
|
|
590,265,000
|
|
-
|
Dividend paid by
subsidiaries to noncontrolling interest shareholders
|
|
(10,145,395)
|
|
(18,789,152)
|
Net cash provided
by (used in ) financing activities
|
|
581,300,459
|
|
(18,355,035)
|
|
|
|
|
|
EFFECT OF FOREIGN
EXCHANGE RATE CHANGES ON CASH
|
|
966,642
|
|
6,918,216
|
|
|
|
|
|
NET
(DECREASE)INCREASE IN CASH AND CASH EQUIVALENTS
|
|
(32,921,605)
|
|
32,679,521
|
|
|
|
|
|
Cash and cash
equivalents at beginning of period
|
|
219,336,848
|
|
183,765,533
|
|
|
|
|
|
Cash and cash
equivalents at end of period
|
|
186,415,243
|
|
216,445,054
|
|
|
|
|
|
Supplemental cash
flow information
|
|
|
|
|
Cash paid for income
taxes
|
|
30,691,960
|
|
18,767,908
|
Noncash investing and
financing activities:
|
|
|
|
|
Acquisition of
property, plant and equipment included in payables
|
|
4,781,628
|
|
3,374,860
|
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
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
2018
|
|
2017
|
|
|
|
USD
|
|
USD
|
Income from
Operations
|
|
|
28,696,680
|
|
38,047,086
|
Non-cash employee
share-based compensation
|
|
7,847,253
|
|
8,514,344
|
Amortization of
acquired intangible assets and land use rights
|
|
1,985,958
|
|
-
|
Adjusted Income from
Operations - Non GAAP
|
|
38,529,891
|
|
46,561,430
|
|
|
|
|
|
|
Net Income
Attributable to the Company
|
|
|
32,921,341
|
|
31,565,115
|
Non-cash employee
share-based compensation
|
|
6,949,127
|
|
7,798,705
|
Amortization of
acquired intangible assets and land use rights
|
|
1,350,452
|
|
-
|
Income tax benefit
related to U.S. Tax Reform
|
|
(7,519,674)
|
|
-
|
Adjusted Net Income
Attributable to the Company - Non GAAP
|
|
33,701,246
|
|
39,363,820
|
Diluted EPS - Non
GAAP
|
|
|
0.96
|
|
1.38
|
|
|
|
|
|
|
Weighted average
number of shares used in computation of Non GAAP diluted
EPS
|
|
34,077,426
|
|
27,657,806
|
|
|
|
|
|
|
|
|
|
For the Nine Months
Ended
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
2018
|
|
2017
|
|
|
|
USD
|
|
USD
|
Income from
Operations
|
|
|
103,528,333
|
|
116,263,923
|
Non-cash employee
share-based compensation
|
|
27,694,079
|
|
24,715,534
|
Amortization of
acquired intangible assets and land use rights
|
|
6,615,610
|
|
-
|
Adjusted Income from
Operations - Non GAAP
|
|
137,838,022
|
|
140,979,457
|
|
|
|
|
|
|
Net Income
Attributable to the Company
|
|
|
93,149,287
|
|
92,587,448
|
Non-cash employee
share-based compensation
|
|
25,125,971
|
|
22,712,507
|
Amortization of
acquired intangible assets and land use rights
|
|
4,498,615
|
|
-
|
Income tax benefit
related to U.S. Tax Reform
|
|
(7,519,674)
|
|
-
|
Adjusted Net Income
Attributable to the Company - Non GAAP
|
|
115,254,199
|
|
115,299,955
|
Diluted EPS - Non
GAAP
|
|
|
3.29
|
|
4.05
|
|
|
|
|
|
|
Weighted average
number of shares used in computation of Non GAAP diluted
EPS
|
|
34,078,243
|
|
27,535,624
|
View original
content:http://www.prnewswire.com/news-releases/china-biologic-reports-financial-results-for-the-third-quarter-of-2018-300742192.html
SOURCE China Biologic Products Holdings, Inc.