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Revenue for the second quarter of 2009 increased approximately 20.6% to$13.6 million, from $11.3 million in the second quarter of 2008. The increasein revenue was driven by the Anti-Viral/Infection product category, whichincreased 19% to $5.2 million over the prior year period. Sales from CNS andCerebral & Cardio Vascular drugs increased 4% to $5.1 million. Digestiveproduct sales increased 101% to $0.94 million, mainly due to the salescontribution from the new product Tiopronin. In the Other Products category(including tumor drug Granisetron, and various other products), salesincreased 36% to $2.3 million.
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Gross profit for the second quarter of 2009 was $5.92 million, compared to$5.95 million in the second quarter of 2008. Gross margin was 43.5%, comparedto 52.8% during the second quarter of 2008. Gross margin performance reflectsincreased sales of lower margin products during this quarter.
Operating expenses for the second quarter of 2009 decreased 31.7% to $1.1million, from $1.6 million in the same period of 2008. Selling expensesincreased 32.3% to $603,924 from $456,630 in the second quarter of 2008, dueto the Company's substantial expanding investment in distribution channels andoverall marketing efforts. For the period, the net recovery of bad debt was$40,147, compared to an increase in bad debt expense (net of recoveries) of$612,413 during the same period in 2008. General and administrative expenseswere roughly flat at $553,607 in the second quarter of 2009 compared to$565,772 in the second quarter of 2008.
Operating income for the second quarter of 2009 increased 11.2% to $4.8million from $4.3 million for the same period in 2008.
Net income for the second quarter of 2009 increased 6.2% to $4.3 million,up from $4.0 million reported in the same period of 2008. Diluted earnings pershare was $0.10 in the second quarter of 2009, compared to $0.10 in the secondquarter of 2008. The EPS calculation is based on 42.3 million fully-dilutedshares, compared to 39.0 million shares in the prior year period.
Balance Sheet
As of June 30, 2009, the Company had cash and cash equivalents of $3.6million, which represented 4.2% of total assets, compared to $5.2 million, or8.2% of total assets, as of March 31, 2009 and $6.9 million, or 9.2% of totalassets, as of June 30, 2008. The quarter over quarter decline was primarilydue to investing activities in new drug development in the second quarter of2009.
Business Update
On June 22, 2009, the Company received official approval from China'sState Food and Drug Administration ("SFDA") to enter Phase I and Phase IIclinical trials to test the efficacy of its cholesterol-lowering drug,Rosuvastatin. The Company plans to begin the trials in the first half of 2009,and estimates that it will receive a production license by the end of 2010.
The Company made improvements in account receivable collections during thesecond quarter of 2009 compared to the previous quarter of the year. Accountreceivable collections continue to be a focus of management and managementexpects further improvement in the quarters ahead.
Financial Guidance
CPHI is reiterating its guidance of 20% top line growth for the full year2009, on a year over year basis.
China Pharma's President and CEO, Ms. Zhilin Li, stated, "We are pleasedto report a quarter with continued revenue growth supported by increasedmarketing efforts and distribution expansion. In the second quarter of 2009,several newly-launched products started to show great potential in sales, andour existing products continued to increase their contributions to revenue.Our second quarter performance also reflects much progress managing ourreceivables collection efforts. We believe our efforts will result in improvedcollections in the coming quarters."
Conference Call
The Company will hold a conference call at 8:00 am ET on August 12, 2009to discuss fiscal second quarter 2009 results. Listeners may access the callby dialing 1-888-396-2298 or 1-617-847-8708 for international callers, accesscode: 39312529. A webcast will also be available through CPHI's website athttp://www.chinapharmaholdings.com . A replay of the call will be availablethrough August 19, 2009. Listeners may access the replay by dialing1-888-286-8010 or +1-617-801-6888 for international callers, access code:62723349.
About China Pharma Holdings, Inc.
China Pharma Holdings, Inc. is a specialty pharmaceutical company withrapidly growing profit that develops, manufactures, and markets treatments fora wide range of high incidence and high mortality conditions in China,including cardiovascular, CNS, infectious, and digestive diseases. TheCompany's cost-effective, high margin business model is driven by marketdemand and supported by eight scalable GMP-certified product lines coveringthe major dosage forms. In addition, the Company has a broad and expandingdistribution network across 30 provinces, municipalities and autonomousregions. The Company is registered in Delaware, USA. Hainan Helpson Medical &Biotechnology Co., Ltd. (Helpson), located in Haikou City, Hainan Province,China, is a wholly owned subsidiary of China Pharma Holdings, Inc. For moreinformation about China Pharma Holdings, Inc., please visithttp://www.chinapharmaholdings.com .
Safe Harbor Statement
Certain statements in this press release and oral statements made by ChinaPharma on its conference call in relation to this release, constituteforward-looking statements for purposes of the safe harbor provisions underThe Private Securities Litigation Reform Act of 1995. Any statements set forthabove that are not historical facts are forward-looking statements thatinvolve risks and uncertainties that could cause actual results to differmaterially from those in the forward-looking statements, which may include,but are not limited to, such factors as unanticipated changes in productdemand, increased competition, failure to obtain or maintain intellectualproperty protection, downturns in the Chinese economy, uncompetitive levels ofresearch and development, failure to obtain regulatory approvals, and otherinformation detailed from time to time in the Company's filings and futurefilings with the United States Securities and Exchange Commission. Theforward-looking statements made herein speak only as of the date of this pressrelease and the Company undertakes no duty to update any forward-lookingstatement to conform the statement to actual results or changes in thecompany's expectations.Second Quarter 2009 Financial Highlights -- Revenue increased 20.6% to $13.6 million from $11.3 million in the second quarter of 2008; -- Gross profit was $5.92 million, compared to $5.95 million in the second quarter of 2008; -- Gross margin was 43.5% compared to 52.8% in the second quarter of 2008; and -- EPS was $0.10, compared to $0.10 in the second quarter of 2008.
SOURCE China Pharma Holdings, Inc.
