Third Quarter 2009 Highlights: -- Revenues increased 82.2% from Q3 of 2008 to $19.2 million -- Gross profit increased 78.9% from Q3 of 2008 to $5.8 million -- Operating income increased 94.7% from Q3 of 2008 to $4.5 million -- Adjusted net income, which excluded a non-cash expense related to change in fair value of warrants for the third quarter of 2009, was $3.4 million, or $0.22 per diluted share -- Net income was $3.2 million, or $0.21 per diluted share -- Entered into a two-year Distribution and Supply Agreement in Pakistan for Levocarnitine -- Entered into agreement to acquire LifeTech Pharmaceuticals, Co. Ltd., a developer, manufacturer and marketer of pharmaceutical products with a portfolio of 39 TCM and Western medicine products
"We are delighted to report that
"Our top-selling drugs for the quarter included Iopamidol by injection, which accounted for 14.0% of revenues and is used to help diagnose heart, brain, blood and nervous system disorders in X-rays or CT scans; Kelinao (Cinepazide Maleate Injection), which accounted for 5.3% of revenues and is used for the treatment of cardio-cerebral vascular diseases; and Hongjin Xiaojie capsules, which accounted for 5.0% of revenues are used to treat pain and for blood circulation. Combined gross margins for these products were 34.3%. Collectively, our top three selling drugs accounted for approximately 24.2% of revenues," said Mr. Yang.
Third Quarter 2009 Results
Product sales in the third quarter totaled
During the third quarter of 2009, revenues generated from rADTZ were
approximately
Gross profit in the third quarter of 2009 was
Operating expenses in the third quarter of 2009 were
Operating income was
The Company's provision for income taxes was
Net income for the third of 2009 was
Nine Month Results
For the first nine months of 2009, total revenues increased to
Financial Condition
As of
Business Outlook
"As we get further into the fourth quarter and look towards 2010, we are excited about the prospects for recombinant Aflatoxin Detoxifizyme (rADTZ), our novel product for removing aflatoxins found in food and animal feed. Our current product permit for rADTZ allows for small-scale trial sales and revenue contributed by rADTZ has not yet been significant. Nonetheless, we anticipate receiving the product permit for rADTZ from the Chinese Ministry of Agriculture by the end of the year and we have purchased additional equipment to increase our current rADTZ production capacity from 50 tons to 1,200 tons in 2010, and 4,200 tons in 2011," said Mr. Yang, the company's CEO.
"We continue to seek out opportunities to further expand our business and
deliver the highest value possible for shareholders. We recently entered into
a two-year agreement to export our self-owned, OEM manufactured product
Levocarnitine, which will be sold in
In October, the Company entered into an equity transfer agreement with
Sinoform Limited to acquire 100% of Sinoform's equity interests in Guangzhou
LifeTech Pharmaceutical Co., Ltd ("LifeTech"). LifeTech's assets are appraised
at
Given the need to temporarily set aside cash to fund the acquisition of LifeTech and facilitate our transition to become a leading, vertically integrated pharmaceutical company, we have had to decrease the amount of working capital available for operations in the fourth quarter of this year. As a result, our fourth quarter results may be affected.
In November,
"In summary, we are very excited about our recently announced acquisition
of LifeTech and also our intent to raise a significant amount of capital from
a highly reputable, private equity investor, subject to final documentation
and shareholder approval,"
Conference Call
About China Medicine Corporation
China Medicine Corporation is a developer and leading distributor of
prescription and over the counter ("OTC") drugs, traditional Chinese medicine
products, herbs and dietary-supplements, medical devices, and medical
formulations in China.
Use of Non-GAAP Financial Measures
GAAP results for three and nine months ended
Because these expenses are non-cash, and not related to the Company's operating results, the Company believes that the non-GAAP information is useful to supplement the Company's condensed consolidated financial statements. A reconciliation of the adjustments to GAAP results appears in the table accompanying this press release. This additional non-GAAP information is not meant to be considered 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.
Cautionary Statement
This press release contains forward-looking statements concerning the Company's business and products. The Company's actual results may differ materially depending on a number of risk factors including, but not limited to, the following: general economic and business conditions, obtaining regulatory approval for new products, the expected contribution of higher margin products, government support for rural health care, competition from existing and new competitors, changes in technology, and various other factors beyond its control. All forward-looking statements are expressly qualified in their entirety by this Cautionary Statement and the risk factors detailed in the Company's reports filed with the Securities and Exchange Commission. China Medicine Corporation undertakes no duty to revise or update any forward-looking statement to reflect events or circumstances after the date of this release.
For more information, please contact:
Company Contact:
Mr. Richard P. Wu
Chief Financial Officer
China Medicine Corporation
Tel: +86-20-8739-1718
Email: konzern08@163.com
Investor Relations Contact:
Mr. Crocker Coulson, President
CCG Investor Relations
Tel: +1-646-213-1915 (NY Office)
Email: crocker.coulson@ccgir.com
Web: http://www.ccgirasia.com
-- FINANCIAL TABLES FOLLOW --
CHINA MEDICINE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2009 2008 2009 2008
REVENUES:
Product sales $18,789,470 $9,963,571 $43,942,953 $27,882,029
Medical formula sales 366,475 553,221 366,475 1,333,341
Total revenues 19,155,945 10,516,792 44,309,428 29,215,370
COST OF GOODS SOLD 13,322,614 7,255,635 32,167,242 19,485,824
GROSS PROFIT 5,833,331 3,261,157 12,142,186 9,729,546
OPERATING EXPENSES:
Research and
development 213,883 288,353 684,019 484,569
Selling, general and
administrative 1,082,234 642,919 3,375,078 2,515,509
Total operating
expenses 1,296,117 931,272 4,059,097 3,000,078
INCOME FROM OPERATIONS 4,537,214 2,329,885 8,083,089 6,729,468
OTHER INCOME (EXPENSE):
Other income
(expense), net (47,965) 7,368 (68,812) 45,455
Change in fair value
of warrant
liabilities (141,682) -- (2,113,589) --
INCOME BEFORE INCOME
TAXES
AND NONCONTROLLING
INTERESTS 4,347,567 2,337,253 5,900,688 6,774,923
PROVISION FOR INCOME
TAXES 1,215,957 411,890 2,331,457 1,252,833
NET INCOME (CHINA
MEDICINE CORPORATION
AND NONCONTROLLING
INTERESTS) 3,131,610 1,925,363 3,569,231 5,522,090
Add: Net loss
attributable to
noncontrolling
interests 88,496 39,777 242,953 85,086
NET INCOME ATTRIBUTABLE
TO CHINA MEDICINE
CORPORATION 3,220,106 1,965,140 3,812,184 5,607,176
OTHER COMPREHENSIVE
INCOME (LOSS):
Foreign currency
translation
adjustment 62,711 97,869 3,726 2,169,693
Foreign currency
translation
adjustment
attributable to
noncontrolling
interests 882 2,164 (183) 58,207
COMPREHENSIVE INCOME $3,283,699 $2,065,173 $3,815,727 $7,835,076
EARNINGS PER SHARE:
Basic $0.21 $0.13 $0.25 $0.37
Diluted $0.21 $0.13 $0.25 $0.36
WEIGHTED AVERAGE SHARES
OUTSTANDING:
Basic 15,265,904 15,226,742 15,241,333 15,153,824
Diluted 15,411,154 15,547,840 15,305,452 15,567,627
CHINA MEDICINE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
September 30, December 31,
2009 2008
(Unaudited)
CURRENT ASSETS
Cash $2,242,581 $2,791,814
Notes receivables 146,700 600,911
Accounts receivable, trade, net of
allowance for doubtful accounts
of $96,609 and $96,609 as of
September 30, 2009 and December
31, 2008, respectively 14,943,092 19,225,091
Other receivable 1,760,400 --
Inventories 7,947,827 4,725,322
Advances to suppliers 8,392,320 6,121,974
Other current assets 237,336 192,080
Total current assets 35,670,256 33,657,192
EQUIPMENT, NET 6,498,621 3,761,637
OTHER ASSETS
Long term prepayment 9,393,293 6,014,920
Intangible assets, net 1,482,225 1,247,567
Total other assets 10,875,518 7,262,487
Total assets $53,044,395 $44,681,316
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Short term Loan $2,934,000 $--
Accounts payable, trade 304,279 61,243
Other payables and accrued
liabilities 29,159 50,559
Customer deposits 44,102 151,429
Taxes payable 249,360 772,289
Liquidated damages payable 44,003 44,003
Total current liabilities 3,604,903 1,079,523
Fair value of warrant liabilities 2,399,910 --
Total liabilities 6,004,813 1,079,523
Commitment and contingencies
SHAREHOLDERS' EQUITY
Preferred stock, $0.0001 par value;
10,000,000 shares authorized,
no shares issued and outstanding -- --
Common stock, $0.0001 par value;
90,000,000 shares authorized,
15,320,139 and 15,226,742 shares
issued and outstanding at
September 30, 2009 and December
31, 2008, respectively 1,531 1,522
Paid-in capital 12,750,025 13,011,012
Statutory reserves 3,178,861 3,178,861
Retained earnings 26,084,749 22,146,572
Accumulated other comprehensive
income 4,432,020 4,428,294
Total shareholders' equity 46,447,186 42,766,261
NONCONTROLLING INTERESTS 592,396 835,532
Total equity 47,039,582 43,601,793
Total liabilities and equity $53,044,395 $44,681,316
CHINA MEDICINE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30,
2009 2008
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income attributable to China
Medicine Corporation $3,812,184 $5,607,177
Net loss attributable to
noncontrolling interests (242,953) (85,087)
Net income 3,569,231 5,522,090
Adjustments to reconcile net income
to cash provided by (used in)
operating activities:
Depreciation and amortization 663,645 289,935
Loss on sale of assets 27,102 --
Stock option and warrant
compensation 101,336 83,467
Amortization of deferred expenses -- 265,971
Change in fair value of warrant
liabilities 2,113,589 --
Change in operating assets and
liabilities
Notes receivables 453,870 (1,197,140)
Accounts receivable, trade 4,278,788 (726,513)
Other receivable (1,759,080) --
Inventories (3,220,094) (1,028,416)
Advances to suppliers (2,268,657) (3,521,687)
Other current assets (23,232) (1,460)
Change in operating liabilities
Accounts payable, trade 242,854 3,731
Other payables and accrued
liabilities (21,402) (52,263)
Customer deposits (107,246) 13,087
Taxes payable (522,537) (395,105)
Net cash provided by (used in)
operating activities 3,528,167 (744,303)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (3,469,593) (147,935)
Purchase of intangible assets (234,544) (2,817,221)
Proceeds from sale of equipment 21,989 --
Long-term prepayment (3,375,766) --
Net cash used in investing
activities (7,057,914) (2,965,156)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from short-term loans 2,931,800 --
Proceeds from exercise of options 50,000 362,500
Net cash provided by financing
activities 2,981,800 362,500
EFFECT OF EXCHANGE RATE ON CASH (1,286) 289,273
DECREASE IN CASH (549,233) (3,057,686)
CASH, beginning of period 2,791,814 5,767,774
CASH, end of period $2,242,581 $2,710,088
For the Three Months ended September 30,
2009 2008
Net Diluted Net Diluted
Income EPS Income EPS
Amount per consolidated
statement of operations 3,220,106 0.21 1,965,140 0.13
Adjustment
Change in fair value of
Warrants 141,682 0.01
Adjusted Amount of Net Income
available to Common
Shareholder 3,361,788 0.22 1,965,140 0.13
Weighted average diluted
shares, 15,411,154 for
three months ended
September 30, 2009 and
15,547,840 for three months
ended September 30, 2008
For the Nine Months ended September 30,
2009 2008
Net Diluted Net Diluted
Income EPS Income EPS
Amount per consolidated
statement of operations 3,812,184 0.25 5,607,176 0.36
Adjustment
Change in fair value of
Warrants 2,113,589 0.14
Adjusted Amount of Net Income
available to Common
Shareholder 5,925,773 0.39 5,607,176 0.36
Weighted average diluted
shares, 15,305,452 for
nine months ended September
30, 2009 and 15,567,627
for nine months ended
September 30, 2008
SOURCE China Medicine Corporation