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
Digital Transformation is much more than a buzzword. The radical shift to digital mechanisms for almost every process is evident across all industries and verticals. This is often especially true in financial services, where the legacy environment is many times unable to keep up with the rapidly shifting demands of the consumer. The constant pressure to provide complete, omnichannel delivery of customer-facing solutions to meet both regulatory and customer demands is putting enormous pressure on...
CloudEXPO | DXWorldEXPO are the world's most influential, independent events where Cloud Computing was coined and where technology buyers and vendors meet to experience and discuss the big picture of Digital Transformation and all of the strategies, tactics, and tools they need to realize their goals. Sponsors of DXWorldEXPO | CloudEXPO benefit from unmatched branding, profile building and lead generation opportunities.
DXWorldEXPO LLC announced today that All in Mobile, a mobile app development company from Poland, will exhibit at the 22nd International CloudEXPO | DXWorldEXPO. All In Mobile is a mobile app development company from Poland. Since 2014, they maintain passion for developing mobile applications for enterprises and startups worldwide.
In his Opening Keynote at 21st Cloud Expo, John Considine, General Manager of IBM Cloud Infrastructure, led attendees through the exciting evolution of the cloud. He looked at this major disruption from the perspective of technology, business models, and what this means for enterprises of all sizes. John Considine is General Manager of Cloud Infrastructure Services at IBM. In that role he is responsible for leading IBM’s public cloud infrastructure including strategy, development, and offering m...
Today we can collect lots and lots of performance data. We build beautiful dashboards and even have fancy query languages to access and transform the data. Still performance data is a secret language only a couple of people understand. The more business becomes digital the more stakeholders are interested in this data including how it relates to business. Some of these people have never used a monitoring tool before. They have a question on their mind like “How is my application doing” but no id...
For far too long technology teams have lived in siloes. Not only physical siloes, but cultural siloes pushed by competing objectives. This includes informational siloes where business users require one set of data and tech teams require different data. DevOps intends to bridge these gaps to make tech driven operations more aligned and efficient.
The best way to leverage your CloudEXPO | DXWorldEXPO presence as a sponsor and exhibitor is to plan your news announcements around our events. The press covering CloudEXPO | DXWorldEXPO will have access to these releases and will amplify your news announcements. More than two dozen Cloud companies either set deals at our shows or have announced their mergers and acquisitions at CloudEXPO. Product announcements during our show provide your company with the most reach through our targeted audienc...
@DevOpsSummit at Cloud Expo, taking place November 12-13 in New York City, NY, is co-located with 22nd international CloudEXPO | first international DXWorldEXPO and will feature technical sessions from a rock star conference faculty and the leading industry players in the world.
Everything run by electricity will eventually be connected to the Internet. Get ahead of the Internet of Things revolution. In his session at @ThingsExpo, Akvelon expert and IoT industry leader Sergey Grebnov provided an educational dive into the world of managing your home, workplace and all the devices they contain with the power of machine-based AI and intelligent Bot services for a completely streamlined experience.
DXWorldEXPO | CloudEXPO are the world's most influential, independent events where Cloud Computing was coined and where technology buyers and vendors meet to experience and discuss the big picture of Digital Transformation and all of the strategies, tactics, and tools they need to realize their goals. Sponsors of DXWorldEXPO | CloudEXPO benefit from unmatched branding, profile building and lead generation opportunities.
With 10 simultaneous tracks, keynotes, general sessions and targeted breakout classes, @CloudEXPO and DXWorldEXPO are two of the most important technology events of the year. Since its launch over eight years ago, @CloudEXPO and DXWorldEXPO have presented a rock star faculty as well as showcased hundreds of sponsors and exhibitors!
22nd International Cloud Expo, taking place June 5-7, 2018, at the Javits Center in New York City, NY, and co-located with the 1st DXWorld Expo will feature technical sessions from a rock star conference faculty and the leading industry players in the world. Cloud computing is now being embraced by a majority of enterprises of all sizes. Yesterday's debate about public vs. private has transformed into the reality of hybrid cloud: a recent survey shows that 74% of enterprises have a hybrid cloud ...
Dhiraj Sehgal works in Delphix's product and solution organization. His focus has been DevOps, DataOps, private cloud and datacenters customers, technologies and products. He has wealth of experience in cloud focused and virtualized technologies ranging from compute, networking to storage. He has spoken at Cloud Expo for last 3 years now in New York and Santa Clara.
HyperConvergence came to market with the objective of being simple, flexible and to help drive down operating expenses. It reduced the footprint by bundling the compute/storage/network into one box. This brought a new set of challenges as the HyperConverged vendors are very focused on their own proprietary building blocks. If you want to scale in a certain way, let's say you identified a need for more storage and want to add a device that is not sold by the HyperConverged vendor, forget about it...
In his keynote at 19th Cloud Expo, Sheng Liang, co-founder and CEO of Rancher Labs, discussed the technological advances and new business opportunities created by the rapid adoption of containers. With the success of Amazon Web Services (AWS) and various open source technologies used to build private clouds, cloud computing has become an essential component of IT strategy. However, users continue to face challenges in implementing clouds, as older technologies evolve and newer ones like Docker c...