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David Gao, Chief Executive Officer of BMP Sunstone, stated, "Our firstquarter 2008 financial results are the strongest achieved in our Company'shistory and reflect the initial revenue and gross margin contributions fromSunstone. Our growing licensed products business also drove gross marginimprovements and we are excited about the increasing presence we are realizingat BMP China."
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Gao continued, "Through the Sunstone acquisition, we significantlyenhanced our product offering with two of China's leading healthcare brands intherapeutic areas that we believe are extremely compelling: pediatrics andwomen's health. We also expanded our distribution reach into more than 50,000retail pharmacies in China. With a stronger brand portfolio and a materiallylarger retail presence, we remain dedicated to realizing synergies across ourorganization in 2008 and beyond."
Revenue for the first quarter of 2008 was $18.1 million, as compared to$5.7 million in the first quarter of 2007. OTC sales, which reflect Sunstonerevenues, were included in the period from February 18, 2008 to the end of thequarter, and contributed $9.5 million. Revenue from licensed products was$1.2 million in the first quarter of 2008 as compared to $406,000 in the firstquarter of 2007. Revenue from distribution was $7.4 million in the firstquarter of 2008 compared to $5.3 million in the comparable period of 2007.
Gross profit increased to $7.7 million from $654,000 in the first quarterof 2007. This reflects a gross margin of 42.7%, which is a substantialincrease year over year from 11.5% in the first quarter of 2007. The increasein gross margins was due to Sunstone revenue contributions as well asincreased licensed products sales, both of which carry a higher gross marginthan distribution revenue. Gross profit includes a one time non-cashadjustment of $609,000 related to amortization on the fair value inventory forthe Sunstone acquisition. Excluding this adjustment, gross profit marginwould have been 46.1%.
Loss from operations improved to $1.4 million from $1.8 million in thefirst quarter of 2007. Operating expense increases included Sunstone-relatedgeneral and administrative expenses, as well as costs related to additionalsenior management, administrative and corporate staff in China. General andadministration expenses increased 70% to $3.2 million in the first quarter of2008 from $1.9 million in the first quarter of 2007. Excluding the $609,000purchase accounting adjustment in cost of sales, described above, the lossfrom operations improved to $787,000 from a loss of $1.8 million in the prioryear period.
Adjusted EBITDA in the first quarter of 2008 was $1,523,000, whichexcludes the impact of $563,000 of stock compensation expense, $977,000 ofamortization debt discount and issuance costs, $802,000 of interest expense,$609,000 of amortization of fair value inventory for the Sunstone acquisition,and $470,000 of amortization for the Sunstone acquisition. The Company incurssignificant non-cash charges for depreciation, amortization and stockcompensation expense that may not reflect the Company's operating performanceand ability to generate cash flow from operations. Management believes thatadjusted EBITDA is a worthwhile indicator of the Company's financialperformance. Adjusted EBITDA is a non-GAAP financial measure within themeaning of the Securities and Exchange Commission (SEC) regulations. Areconciliation of Adjusted EBITDA to net income is included in a table at theend of this press release.
Net loss was $2.5 million, or ($0.07) per diluted share. On a pro formabasis, assuming the Sunstone acquisition was completed on Janu
