Welcome!

News Feed Item

China Pharma Holdings, Inc. Reports Full Year 2013 Financial Results

HAIKOU CITY, China, March 21, 2014 /PRNewswire/ -- China Pharma Holdings, Inc. (NYSE MKT: CPHI) ("China Pharma" or the "Company"), an NYSE MKT listed corporation with its fully-integrated specialty pharmaceuticals subsidiary based in China, today announced financial results for the year ended December 31, 2013.

Full Year Highlights

  • Revenue decreased 40% to $32.8 million in fiscal year 2013 from $54.5 million in fiscal year 2012.
  • Loss from operations was $18.6 million in fiscal year 2013 compared to income from operation of $5.9 million in 2012, a decrease of $24.5 million.
  • Net loss was $20.0 million in fiscal year 2013 compared to net income of $4.6 million in 2012, a decrease of $24.6 million.  Loss per common share was 46 cents per basic and diluted share in fiscal 2013 compared with earnings of 11 cents per basic and diluted share in 2012.
  • Gross loss margin was (1.5%) in fiscal year 2013, compared to gross profit margin of 26% in fiscal 2012. Without the effect of inventory obsolescence, management estimates that our gross profit would have been approximately 29% in both 2013 and 2012.

"China provides a unique opportunity to its pharmaceutical industry; however, real challenges remain: from compulsory new GMP upgrading requirement and rising pricing pressure to extended regulatory review time for new medical production applications, which temporally impacted our performance negatively in 2013," said Ms. Zhilin Li, China Pharma's Chairman and CEO. Ms Li continued, "we have maintained a conservative stance in general sales and credit policies in 2013 in order to ensure the capital requirements for new GMP upgrading requirements, and control and improve the condition of our accounts receivable. As of January 1, 2014, we have suspended our dry powder injectable and liquid injectable production lines due to the failure to meet the new GMP upgrading deadline. However, we have already completed the overall architectural structure of our new facility, and are in the process of installation and commissioning the equipment. We are looking forward to submitting the application for new GMP certificate in the second quarter of 2014."

Full Year Results

Revenues for the year ended December 31, 2013 were $32.8 million, a decrease of 40% from revenues of $54.5 million for the year ended December 31, 2012. This decrease primarily resulted from decreases in sales throughout all our product categories, especially our CNS Cerebral &Cardio Vascular products (decreased by roughly $8 million) and our Anti-Viro/Infectious & Respiratory products (decreased by roughly $6.3 million).

Gross loss for the year ended December 31, 2013 was $0.5 million, compared to gross profit of $14.1 million in 2012, a decrease of $14.6 million. Gross loss margin was (1.5%) in 2013, compared to gross profit margin of 25.8% for 2012. Without the effect of inventory obsolescence, management estimates that our gross profit would have been approximately 29% in both 2013 and 2012. The Healthcare Reform instituted by the Chinese government since 2009 contains pricing controls, which have resulted in margin compression in most pharmaceutical products on the market today, especially in the generic space where many of our products are sold. Going forward, we expect to see continued pricing pressures on most products, while new products could help to support overall gross margin once they are launched. We launched Candesartan in November 2013 and started its marketing activities.

Selling, general and administrative expenses in 2013 were $5.7 million, or 17.3% of sales, compared to $6.4 million, or 11.8% of sales, in 2012. For the year ended December 31, 2013, the Company's research and development expense was $1.7 million, compared to $0.4 million in 2012. The increase in R&D expense was mainly due to the fact that the Company has started to take a dominant position in the research activities of formulation screening, new technology exploration, technical criteria improvement in 2013. We expect this new model will improve our exploration channels for pipeline products.

For the year ended December 31, 2013, the Company's bad debt expense was $10.8 million, compared to a bad debt expense of $0.9 million in 2012. In the fourth quarter of 2013, we implemented a one-time trade receivables collection discount program to accelerate the collection of old accounts receivable. Management negotiated settlement offers with certain customers from which we had accounts receivable balances of approximately $8.0 million that were greater than one year past due. The offers to these customers were comprised of discounts ranging from 15% to 30% of the total past due balance in exchange for payment of the remaining balance in full by December 31, 2013. As a result of this program, we were able to collect cash of approximately $5.85 million after granting those customers discounts totaling $2.1 million. The collection discounts were recorded as bad debt expense.

Operating loss was $18.6 million in 2013 compared to operating income of $5.9 million in 2012, a decrease of $24 million. The lower operating income in 2013 reflects lower revenue, higher inventory obsolescence and higher bad debt expenses in 2013.

For the years ended December 31, 2013 and 2012, our income tax rate was 15%. Income tax expense was $1.1 million and $1.0 million for the years ended December 31, 2013 and 2012, respectively. We renewed our "National High-Tech Enterprise" status ("National HT Status") from the PRC government in the third quarter of 2013. With this designation, for the years ending December 31, 2014, 2015 and 2016, we will continue to enjoy a preferential tax rate of 15% which is notably lower than the statutory income tax rate of 25%.

Net loss for the year 2013 was $20.0 million, or $0.46 per basic and diluted share, compared to net income of $4.6 million, or $0.11 per basic and diluted share in 2012. The decrease in net income was mainly due to the decrease in revenue, increase in inventory obsolescence, and increase in bad debt expense.

Financial Condition

As of December 31, 2013, the Company had cash and cash equivalents of $6.0 million compared to $4.0 million as of December 31, 2012. Year-over-year, working capital decreased to $72 million in 2013 from $98 million in 2012 and the current ratio was 7.0 times in 2013, decreased from 7.7 times in 2012.

Our accounts receivable balance decreased to $45.1 million at December 31, 2013 from $66.2 million at December 31, 2012. Our receivables decreased due to our enhanced collection efforts, increased allowance and the trade receivables collection discount program implemented in the fourth quarter of 2013 to encourage the collection of accounts receivable aged over one year, and a decrease in sales.

For the year ended December 31, 2013, cash flow from operating activities was $8.6 million, as compared to $3.6 million in 2012.

In addition, we entered an eight-year construction loan facility with a bank on June 21, 2013. The total loan facility amount is RMB 80,000,000 (approximately $13 million). We utilized RMB 76,283,350 (approximately $12.4 million) of the facility through March 7, 2014. The cash flow generated from operating activities and the newly executed construction loan facility is being used to fund the construction of our new GMP upgrading project.

Pipeline Update

As of December 31, 2013, China Pharma had various pipeline drugs in different stages of active development. Some of these are highlighted below:

  • Antibiotic Combination - We completed the Phase I clinical trials of our novel cephalosporin-based combination antibiotic. We are currently in Phase II of the clinical trial, due to the increasedregulatory requests for clinical works.
  • ŸRosuvastatin - Rosuvastatin is a generic form of Crestor, a drug for the treatmentof high blood cholesterol levels. Clinical trials for this generic drug were completed in the fourth quarter of 2010 and we have submitted an application for production approval, and are performing supplemental trials of related materials pursuant to the new criteria requirements.
  • Heart Disease Drug - We have an oral solution for the treatment of coronary heart diseasein our new product pipeline. This product comes with a patented Traditional Chinese Medicine (TCM) formula and is currently in Phase III clinical trials following the improved regulatory criteria for clinical works.

Conference Call

The Company will hold a conference call at 8:30 am ET on March 21, 2014 to discuss fiscal year 2013 results. Listeners may access the call by dialing 1-800-742-9301or +65-3158-0667 for international callers, Conference ID # 8557805. A webcast will also be available through CPHI's website at http://www.chinapharmaholdings.com. A replay of the call will be accessible through March 28, 2014 by dialing 1-855-452-5696 or +61-281-990-299 for international callers, Conference ID # 8557805.

About China Pharma Holdings, Inc.

China Pharma Holdings, Inc. is a specialty pharmaceutical company that develops, manufactures and markets a diversified portfolio of products focused on conditions with a high incidence and high mortality rates in China, including cardiovascular, CNS, infectious, and digestive diseases. The Company's cost-effective, high-margin business model is driven by market demand and supported by eight scalable GMP-certified product lines covering the major dosage forms. In addition, the Company has a broad and expanding nationwide distribution network across all major cities and provinces in China. The Company's wholly-owned subsidiary, Hainan Helpson Medical & Biotechnology Co., Ltd., is located in Haikou City, Hainan Province. For more information about China Pharma Holdings, Inc., please visit http://www.chinapharmaholdings.com. The Company routinely posts important information on its website.

Safe Harbor Statement 

Certain statements in this press release constitute forward-looking statements for purposes of the safe harbor provisions under The Private Securities Litigation Reform Act of 1995. Any statements set forth above that are not historical facts are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, which may include, but are not limited to, such factors as the achievability of financial guidance, success of new product development, unanticipated changes in product demand, increased competition, downturns in the Chinese economy, uncompetitive levels of research and development, and other information detailed from time to time in the Company's filings and future filings with the United States Securities and Exchange Commission. The forward-looking statements made herein speak only as of the date of this press release and the Company undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the Company's expectations except as required by applicable law or regulation.

Contact:

China Pharma Holdings, Inc.
Phone: +86-898-6681-1730 (China)
Email: [email protected]

- FINANCIAL TABLES FOLLOW - 

 

CHINA PHARMA HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS



December 31,


2013


2012

ASSETS




Current Assets:




Cash and cash equivalents

$      5,993,139


$     4,029,708

Banker's acceptances

336,003


101,570

Trade accounts receivable, less allowance for doubtful




accounts of $13,301,622 and $4,429,945, respectively

45,147,602


66,175,570

Other receivables, less allowance for doubtful




accounts of $43,064 and $49,881, respectively

175,739


80,799

Advances to suppliers

7,626,716


4,816,354

Inventory, less allowance for obsolescence 




of $8,027,126 and $1,769,984, respectively

24,677,120


36,359,516

Deferred tax assets

-


967,671

Total Current Assets

83,956,319


112,531,188





Advances for purchases of intangible assets

41,701,505


39,263,977

Property and equipment, net of accumulated depreciation of




$5,264,350 and $4,273,373, respectively

30,241,337


9,031,894

Intangible assets, net of accumulated amortization of




$3,812,992 and $2,944,726, respectively

1,711,793


2,412,854

TOTAL ASSETS

$ 157,610,954


$ 163,239,913





LIABILITIES AND STOCKHOLDERS' EQUITY




Current Liabilities:




Trade accounts payable

$    1,877,437


$     2,841,862

Accrued expenses

323,651


202,185

Accrued taxes payable

-


2,426,826

Other payables

1,312,361


1,094,886

Advances from customers

2,228,238


1,945,984

Other payables - related parties

1,354,567


1,354,567

Short-term notes payable

4,909,662


4,761,073

Total Current Liabilities

12,005,916


14,627,383

Non-current Liabilities:




Construction loan facility

12,484,183


-

Long-term deferred tax liability

176,414


95,963

Total Liabilities

24,666,513


14,723,346

Stockholders' Equity:




Preferred stock, $0.001 par value; 5,000,000 shares authorized;




no shares issued or outstanding

-


-

Common stock, $0.001 par value; 95,000,000 shares authorized;




43,579,557 shares and 43,579,557 shares outstanding, respectively   

43,580


43,580

Additional paid-in capital

23,590,204


23,590,204

Retained earnings

88,896,276


108,904,325

Accumulated other comprehensive income

20,414,381


15,978,458

Total Stockholders' Equity

132,944,441


148,516,567

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$ 157,610,954


$ 163,239,913

 

CHINA PHARMA HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME



For the Years


Ended December 31,


2013


2012

Revenue

$    32,806,678


$     54,507,049

Cost of revenue

23,405,886


38,660,814

Inventory obsolescence

9,881,711


1,769,984





Gross (loss) profit

(480,919)


14,076,251





Operating expenses:




Selling expenses

3,284,905


3,535,214

General and administrative expenses

2,404,338


2,874,644

Research and development expenses               

1,683,244


438,662

Bad debt expense

10,752,991


871,612

Impairment of intangible assets

-


593,095

Total operating expenses

18,125,478


8,313,227





Government subsidy income

-


141,987





(Loss) income from operations

(18,606,397)


5,905,011





Other income (expense):




Interest income

8,457


4,944

Interest expense

(348,696)


(308,375)

Net other expense

(340,239)


(303,431)





(Loss) income before income taxes

(18,946,636)


5,601,580

Income tax expense

(1,061,413)


(983,921)

Net (loss) income

(20,008,049)


4,617,659

Other comprehensive income - foreign 




currency translation adjustment

4,435,923


1,274,091

Comprehensive (loss) income

$    (15,572,126)


$      5,891,750

(Loss) earnings per share:




Basic

$               (0.46)


$               0.11

Diluted

$               (0.46)


$               0.11

 

CHINA PHARMA HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS



For the Years


Ended December 31,


2013


2012

Cash Flows from Operating Activities:




Net (loss) income

$ (20,008,049)


$    4,617,659

Depreciation and amortization

1,612,830


1,462,771

Stock based compensation

-


141,721

Bad debt expense

10,752,991


871,612

Deferred income taxes

1,061,413


(430,250)

Inventory obsolescence reserve

6,121,655


1,769,984

Impairment of intangible assets

-


593,095

Changes in assets and liabilities:




Trade accounts and other receivables

3,633,180


(1,098,322)

Advances to suppliers

(2,625,629)


1,014,760

Inventory

11,155,810


(4,702,575)

Trade accounts payable

(1,183,733)


(306,040)

Accrued expenses and other liabilities

356,640


246,817

Accrued taxes payable

(2,499,949)


(683,357)

Other payables

-


744

Advances from customers

218,656


145,201

Net Cash Provided by Operating Activities

8,595,815


3,643,820





Cash Flows from Investing Activities:




Advances for purchases of intangible assets

(298,631)


(3,218,035)

Advances for purchases of property and equipment

-


(1,612,670)

Purchases of property and equipment

(18,794,261)


(156,878)

Net Cash Used in Investing Activities

(19,092,892)


(4,987,583)





Cash Flows from Financing Activities:




Proceeds from construction term loan

12,322,648


-

Proceeds from issuance of notes payable

-


793,223

Proceeds from related party loan

-


493,004

Net Cash Provided by Financing Activity

12,322,648


1,286,227





Effect of Exchange Rate Changes on Cash

137,860


36,390

Net (Decrease ) Increase in Cash and Cash Equivalents

1,963,431


(21,146)

Cash and Cash Equivalents at Beginning of Period

4,029,708


4,050,854

Cash and Cash Equivalents at End of Period

$     5,993,139


$    4,029,708





Supplemental Cash Flow Information:




Cash paid for interest

$        569,855


$       298,433

Cash paid for income taxes

2,481,164


2,138,853





Supplemental Noncash Investing and Financing Activities:




Accounts payable for purchases of property and equipment

$        144,243


$       151,731

Accounts receivable collected with banker's acceptances

8,317,045


4,354,825

Purchases of property and equipment paid with banker's acceptances       

2,564,790


1,540,820

Advances for purchases of intangibles paid with banker's acceptances

897,820


27,909

Inventory purchased with banker's acceptances

4,626,165


2,768,805

SOURCE China Pharma Holdings, Inc.

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

Latest Stories
The IoT is changing the way enterprises conduct business. In his session at @ThingsExpo, Eric Hoffman, Vice President at EastBanc Technologies, discuss how businesses can gain an edge over competitors by empowering consumers to take control through IoT. We'll cite examples such as a Washington, D.C.-based sports club that leveraged IoT and the cloud to develop a comprehensive booking system. He'll also highlight how IoT can revitalize and restore outdated business models, making them profitable...
SYS-CON Events announced today the Docker Meets Kubernetes – Intro into the Kubernetes World, being held June 9, 2016, in conjunction with 18th Cloud Expo | @ThingsExpo, at the Javits Center in New York, NY. Register for 'Docker Meets Kubernetes Workshop' Here! This workshop led by Sebastian Scheele, co-founder of Loodse, introduces participants to Kubernetes (container orchestration). Through a combination of instructor-led presentations, demonstrations, and hands-on labs, participants learn ...
The IoTs will challenge the status quo of how IT and development organizations operate. Or will it? Certainly the fog layer of IoT requires special insights about data ontology, security and transactional integrity. But the developmental challenges are the same: People, Process and Platform. In his session at @ThingsExpo, Craig Sproule, CEO of Metavine, will demonstrate how to move beyond today's coding paradigm and share the must-have mindsets for removing complexity from the development proc...
Customer experience has become a competitive differentiator for companies, and it’s imperative that brands seamlessly connect the customer journey across all platforms. With the continued explosion of IoT, join us for a look at how to build a winning digital foundation in the connected era – today and in the future. In his session at @ThingsExpo, Chris Nguyen, Group Product Marketing Manager at Adobe, will discuss how to successfully leverage mobile, rapidly deploy content, capture real-time d...
In his session at 18th Cloud Expo, Andrew Cole, Director of Solutions Engineering at Peak 10, will discuss how the newest technology advances are reducing the cost and complexity of traditional business continuity and disaster recovery solutions. Attendees will: Learn why having a full disaster recovery strategy is more important now than ever before Explore the key drivers of a successful disaster recovery solution Achieve measurable operational and business value from a disaster recovery ...
The cloud era has reached the stage where it is no longer a question of whether a company should migrate, but when. Enterprises have embraced the outsourcing of where their various applications are stored and who manages them, saving significant investment along the way. Plus, the cloud has become a defining competitive edge. Companies that fail to successfully adapt risk failure. The media, of course, continues to extol the virtues of the cloud, including how easy it is to get there. Migrating...
As organizations shift towards IT-as-a-service models, the need for managing and protecting data residing across physical, virtual, and now cloud environments grows with it. Commvault can ensure protection, access and E-Discovery of your data – whether in a private cloud, a Service Provider delivered public cloud, or a hybrid cloud environment – across the heterogeneous enterprise. In his general session at 18th Cloud Expo, Randy De Meno, Chief Technologist - Windows Products and Microsoft Part...
SYS-CON Events announced today that Hanu Software will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Leveraging best-in-class people, processes, and technologies, Hanu provides high-quality, high-value software development and business process outsourcing services to independent software vendors (ISVs) and enterprises.
SYS-CON Events announced today that ContentMX, the marketing technology and services company with a singular mission to increase engagement and drive more conversations for enterprise, channel and SMB technology marketers, has been named “Sponsor & Exhibitor Lounge Sponsor” of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2016, at the Javits Center in New York City, New York. “CloudExpo is a great opportunity to start a conversation with new prospects, but what happens after the...
What a difference a year makes. Organizations aren’t just talking about IoT possibilities, it is now baked into their core business strategy. With IoT, billions of devices generating data from different companies on different networks around the globe need to interact. From efficiency to better customer insights to completely new business models, IoT will turn traditional business models upside down. In the new customer-centric age, the key to success is delivering critical services and apps wit...
Join us at Cloud Expo | @ThingsExpo 2016 – June 7-9 at the Javits Center in New York City and November 1-3 at the Santa Clara Convention Center in Santa Clara, CA – and deliver your unique message in a way that is striking and unforgettable by taking advantage of SYS-CON's unmatched high-impact, result-driven event / media packages.
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, will provide an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life ...
SYS-CON Events announced today that BMC Software has been named "Siver Sponsor" of SYS-CON's 18th Cloud Expo, which will take place on June 7-9, 2015 at the Javits Center in New York, New York. BMC is a global leader in innovative software solutions that help businesses transform into digital enterprises for the ultimate competitive advantage. BMC Digital Enterprise Management is a set of innovative IT solutions designed to make digital business fast, seamless, and optimized from mainframe to mo...
SYS-CON Events announced today that Super Micro Computer, Inc., a global leader in Embedded and IoT solutions, will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. Supermicro (NASDAQ: SMCI), the leading innovator in high-performance, high-efficiency server technology, is a premier provider of advanced server Building Block Solutions® for Data Center, Cloud Computing, Enterprise IT, Hadoop/Big Data, HPC and ...
SYS-CON Events announced today that MobiDev will exhibit at SYS-CON's 18th International Cloud Expo®, which will take place on June 7-9, 2016, at the Javits Center in New York City, NY. MobiDev is a software company that develops and delivers turn-key mobile apps, websites, web services, and complex software systems for startups and enterprises. Since 2009 it has grown from a small group of passionate engineers and business managers to a full-scale mobile software company with over 200 develope...