SYS-CON MEDIA Authors: Xenia von Wedel, Peter Silva, Glenn Rossman, Ava Smith, Elizabeth White

News Feed Item

China Pharma Holdings, Inc. Reports Second Quarter 2014 Financial Results

HAIKOU CITY, China, Aug. 15, 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 its financial results for the three months ended June 30, 2014.

Second Quarter Highlights

  • Revenue was $6.1 million in the second quarter of 2014, which represented a decrease of 24% from $8.0 million in the second quarter of 2013.
  • Loss from operations was $8.5 million in the second quarter of 2014 compared to $4.8 million in the second quarter of 2013.
  • Net loss was $8.6 million in the second quarter of 2014 compared to $4.5 million in the second quarter of 2013.  Loss per common share was $0.20 per basic and diluted share in the second quarter of 2014 compared with $0.10 in the second quarter of 2013.
  • Gross profit margin was 39% in the second quarter of 2014, compared to 27% in second quarter of 2013. The increase in gross profit margin was mainly due to the decrease in purchasing prices of certain raw materials and the increase in selling prices of certain products due to market fluctuation.

"We have submitted the application for a new GMP certificate at the end of June 2014. We believe that the GMP upgrading will be successful and expect the new GMP certificate to be issued in approximately three to six months from our submission of the application," said Ms. Zhilin Li, China Pharma's Chairman and CEO.  Ms. Li continued, "The national CFDA staff was originally scheduled for an on-site-review of our new facility and production lines in late July of 2014. The review is a mandatory and major step in order for us to receive the new GMP certification.  However, due to a once-in-forty-year 16 grade super typhoon Rammasun hitting Haikou on July 18, 2014, the on-site-review was postponed and the typhoon caused considerable damage to our manufacturing facilities and inventory. We have taken emergency measures to restore and recover post-typhoon to be ready for the rescheduled on-site-review in mid-August."

Second Quarter 2014 Results

Revenue decreased by 24% to $6.1 million for the three months ended June 30, 2014, as compared to $8.0 million for the three months ended June 30, 2013, due to the suspension of our injectable production lines this year.

Our cost of revenue was $3.7 million, or 61% of total revenue in the second quarter of 2014, which represented a decrease of $2.1 million from $5.8 million, or 73% of total revenue, in the second quarter of 2013.  The decrease in cost of revenue was mainly due to a decrease in purchasing prices of certain raw materials result from market fluctuation.

Gross profit was $2.4 million in the second quarter of 2014, an increase of $0.3 million, from $2.2 million in the same period of 2013. Our gross profit margin in the second quarter of 2014 was 39% compared to 27% in the same period 2013. The increase in gross profit margin was mainly due to the decrease in purchasing prices of certain raw materials and the increase in selling prices of certain products result from market fluctuation.  

Selling, general and administrative expenses were $1.0 million, or 16% of sales in the second quarter of 2014, compared to $1.3 million, or 16% of sales, in the same period in 2013. The Company's research and development expense was $1.9 million in the second quarter of 2014, compared to $0.9 million in the same period last year. The increase in R&D expense was mainly due to the costs related to testing of the new production lines and the payment schedule per milestone stated in the contracts.

Our bad debt expenses were $8.0 million in the second quarter of 2014, compared to $4.8 million in the same period in 2013. The increase in bad debt expenses was mainly due to the increase in the aged accounts receivable.

Our operating loss was $8.5 million in the second quarter of 2014, compared to $4.8 million in the same period in 2013. The increase in operating loss was primarily due to the decrease in sales, the increase in bad debt expense and R&D expense recognized during the three months ended June 30, 2014.

For the three months ended June 30, 2014 and 2013, our income tax rate was 15%. Income tax expense was $0.02 million for the three months ended June 30, 2014, and income tax benefit was $0.4 million for the three months ended June 30, 2013. The income taxes recognized for the three months ended June 30, 2014 and 2013 were related to changes in deferred tax assets and liabilities. 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 was $8.6 million or $0.20 per basic and diluted share in the second quarter of 2014, compared to $4.5 million, or $0.10 per basic and diluted share in the same period in 2013. The increase in net loss was primarily due to the decrease in sales, the increase in bad debt expense and R&D expense recognized for the three months ended June 30, 2014.

Six Months Results

Revenue for the six months ended June 30, 2014 was $13.2 million, down 19% from revenue of $16.3 million for the six months ended June 30, 2013.

Gross profit for the six months ended June 30, 2014 was $5.1 million for the six months ended June 30, 2014, compared to $0.6 million for the corresponding period of 2013. Gross profit for the six months ended June 30, 2013 was impacted by an inventory obsolescence amount of $3.7 million during that period.

Operating loss was $10.9 million for the six months ended June 30, 2014, decreased by $3.1 million from $7.8 million for the same period of 2013.

Net loss was $11.0 million, or $0.25 per basic and diluted share for the six months ended June 30, 2014, compared to $4.2 million, or $0.17 per basic and diluted share, for the same period a year ago.

Financial Condition

As of June 30, 2014, the Company had cash and cash equivalents of $4.4 million compared to $6.0 million as of December 31, 2013. Working capital decreased to $57.1 million as of June 30, 2014 from $72.0 million as of December 31, 2013 and the current ratio was 5.8 times as of June 30, 2014 compared to 7.0 times as of December 31, 2013.

Our accounts receivable balance decreased to $35.9 million at June 30, 2014 from $45.1 million at December 31, 2013. The decrease was due to our enhanced collection efforts as well as the increased allowance for doubtful accounts at June 30, 2014 compared to December 31, 2013.

For the three months ended June 30, 2014, cash flow from operating activities was $2.4 million, as compared to $3.1 million in the same period in 2013.

Conference Call

The Company will hold a conference call at 8:30 am ET on August 15, 2014 to discuss its second quarter 2014 results. Listeners may access the call by dialing 1-866-519-4004 or 65-672-393-81 for international callers, Conference ID # 81036556. A webcast will also be available through CPHI's website at http://www.chinapharmaholdings.com.  A replay of the call will be accessible until August 23, 2014 by dialing 1-855-452-5696 or 61-281-990-299 for international callers, Conference ID # 81036556.

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.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)








June 30,


December 31,



2014


2013

ASSETS





Current Assets:





Cash and cash equivalents


$      4,425,744


$      5,993,139

Banker's acceptances


92,832


336,003

Trade accounts receivable, less allowance for doubtful





accounts of $24,499,361 and $13,301,622, respectively


35,904,934


45,147,602

Other receivables, less allowance for doubtful





accounts of $60,083 and $43,064, respectively


482,862


175,739

Advances to suppliers


7,142,290


7,626,716

Inventory, less allowance for obsolescence 





of $7,968,701 and $8,027,126, respectively


20,960,894


24,677,120

Total Current Assets


69,009,556


83,956,319






Advances for purchases of intangible assets


41,397,984


41,701,505

Property and equipment, net of accumulated depreciation of





$5,628,507 and $5,264,350, respectively


34,115,618


30,241,337

Intangible assets, net of accumulated amortization of





$3,978,083 and $3,812,992, respectively


1,506,490


1,711,793

TOTAL ASSETS


$  146,029,648


$  157,610,954






LIABILITIES AND STOCKHOLDERS' EQUITY





Current Liabilities:





Trade accounts payable


$      2,541,166


$      1,877,437

Accrued expenses


293,539


323,651

Other payables


1,179,720


1,312,361

Advances from customers


1,626,334


2,228,238

Other payables - related parties


1,354,567


1,354,567

Short-term notes payable


4,873,928


4,909,662

Total Current Liabilities


11,869,254


12,005,916

Non-current Liabilities:





Construction loan facility


12,997,141


12,484,183

Long-term deferred tax liability


213,575


176,414

Total Liabilities


25,079,970


24,666,513

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


77,862,833


88,896,276

Accumulated other comprehensive income


19,453,061


20,414,381

Total Stockholders' Equity


120,949,678


132,944,441

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY


$  146,029,648


$  157,610,954






CHINA PHARMA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)












For the Three Months


For the Six Months



Ended June 30,


Ended June 30,



2014


2013


2014


2013

Revenue


$          6,130,544


$          8,026,325


$        13,236,059


$        16,275,712

Cost of revenue


3,713,147


5,849,002


8,158,276


11,974,402

Inventory obsolescence


-


27,178


-


3,720,073










Gross profit


2,417,397


2,150,145


5,077,783


581,237










Operating expenses:









Selling expenses


627,442


701,687


1,447,847


1,513,741

General and administrative expenses


382,832


591,251


806,759


1,164,263

Research and development expenses


1,902,027


865,249


2,346,434


1,031,664

Bad debt expense


8,032,315


4,752,733


11,340,444


4,632,803

Total operating expenses


10,944,616


6,910,920


15,941,484


8,342,471










(Loss) income from operations


(8,527,219)


(4,760,775)


(10,863,701)


(7,761,234)










Other income (expense):









Interest income


16,828


1,016


38,611


2,602

Interest expense


(113,363)


(92,049)


(169,810)


(174,494)

Net other income (expense)


(96,535)


(91,033)


(131,199)


(171,892)










(Loss) income before income taxes


(8,623,754)


(4,851,808)


(10,994,900)


(7,933,126)

Income tax benefit (expense)


(19,196)


387,983


(38,543)


656,994

Net (loss) income


(8,642,950)


(4,463,825)


(11,033,443)


(7,276,132)

Other comprehensive income - foreign currency









translation adjustment


153,664


2,218,896


(961,320)


3,038,663

Comprehensive (loss) income


$        (8,489,286)


$        (2,244,929)


$      (11,994,763)


$        (4,237,469)

(Loss) earnings per share:









Basic


$                 (0.20)


$                 (0.10)


$                 (0.25)


$                 (0.17)

Diluted


$                 (0.20)


$                 (0.10)


$                 (0.25)


$                 (0.17)

 

CHINA PHARMA HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)








For the Six Months



Ended June 30,



2014


2013

Cash Flows from Operating Activities:





Net loss


$   (11,033,443)


$     (7,276,132)

Depreciation and amortization


596,819


697,549

Bad debt expense


11,340,444


4,632,803

Deferred income taxes


38,543


(656,994)

Inventory obsolescence reserve


-


3,720,073

Changes in assets and liabilities:





Trade accounts receivable


(3,398,497)


1,672,236

Other receivables


(309,181)


(468,509)

Advances to suppliers


429,998


(648,436)

Inventory


4,781,501


1,745,256

Trade accounts payable


714,380


1,403,638

Accrued taxes payable


(35,513)


(1,767,344)

Other payables and accrued expenses


(124,072)


(15,103)

Advances from customers


(587,165)


19,003

Net Cash Provided by Operating Activities


2,413,814


3,058,040






Cash Flows from Investing Activities:





Advances for purchases of intangible assets


-


(4,572,982)

Purchases of property and equipment and





construction in process


(4,543,490)


(49,030)

Net Cash Used in Investing Activities


(4,543,490)


(4,622,012)






Cash Flows from Financing Activities:





Proceeds from construction term loan


605,347


-

Net Cash Provided by Financing Activity


605,347


-






Effect of Exchange Rate Changes on Cash


(43,066)


58,787

Net (Decrease) Increase in Cash and Cash Equivalents


(1,567,395)


(1,505,185)

Cash and Cash Equivalents at Beginning of Period


5,993,139


4,029,708

Cash and Cash Equivalents at End of Period


$       4,425,744


$       2,524,523






Supplemental Cash Flow Information:





Cash paid for interest


$          621,841


$          167,819

Cash paid for income taxes


-


1,716,064






Supplemental Noncash Investing and Financing Activities:





Accounts payable for purchases of property and equipment


$            35,275


$          153,621

Accounts receivable collected with banker's acceptances


994,624


5,756,309

Inventory purchased with banker's acceptances


1,235,956


2,099,243

Advances for purchases of equipment paid with banker's acceptances


-


2,063,840

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
High-performing enterprise Software Quality Assurance (SQA) teams validate systems that are ready for use - getting most actively involved as components integrate and form complete systems. These teams catch and report on defects, making sure the customer gets the best software possible. SQA teams have leveraged automation and virtualization to execute more thorough testing in less time - bringing Dev and Ops together, ensuring production readiness. Does the emergence of DevOps mean the end of E...
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using ...
The Internet of Things is tied together with a thin strand that is known as time. Coincidentally, at the core of nearly all data analytics is a timestamp. When working with time series data there are a few core principles that everyone should consider, especially across datasets where time is the common boundary. In his session at Internet of @ThingsExpo, Jim Scott, Director of Enterprise Strategy & Architecture at MapR Technologies, discussed single-value, geo-spatial, and log time series dat...
"Verizon offers public cloud, virtual private cloud as well as private cloud on-premises - many different alternatives. Verizon's deep knowledge in applications and the fact that we are responsible for applications that make call outs to other systems. Those systems and those resources may not be in Verizon Cloud, we understand at the end of the day it's going to be federated," explained Anne Plese, Senior Consultant, Cloud Product Marketing at Verizon Enterprise, in this SYS-CON.tv interview at...
"For the past 4 years we have been working mainly to export. For the last 3 or 4 years the main market was Russia. In the past year we have been working to expand our footprint in Europe and the United States," explained Andris Gailitis, CEO of DEAC, in this SYS-CON.tv interview at Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
P2P RTC will impact the landscape of communications, shifting from traditional telephony style communications models to OTT (Over-The-Top) cloud assisted & PaaS (Platform as a Service) communication services. The P2P shift will impact many areas of our lives, from mobile communication, human interactive web services, RTC and telephony infrastructure, user federation, security and privacy implications, business costs, and scalability. In his session at @ThingsExpo, Robin Raymond, Chief Architect...
The Domain Name Service (DNS) is one of the most important components in networking infrastructure, enabling users and services to access applications by translating URLs (names) into IP addresses (numbers). Because every icon and URL and all embedded content on a website requires a DNS lookup loading complex sites necessitates hundreds of DNS queries. In addition, as more internet-enabled ‘Things' get connected, people will rely on DNS to name and find their fridges, toasters and toilets. Acco...
The term culture has had a polarizing effect among DevOps supporters. Some propose that culture change is critical for success with DevOps, but are remiss to define culture. Some talk about a DevOps culture but then reference activities that could lead to culture change and there are those that talk about culture change as a set of behaviors that need to be adopted by those in IT. There is no question that businesses successful in adopting a DevOps mindset have seen departmental culture change, ...
"Cloud consumption is something we envision at Solgenia. That is trying to let the cloud spread to the user as a consumption, as utility computing. We want to allow the people to just pay for what they use, not a subscription model," explained Ermanno Bonifazi, CEO & Founder of Solgenia, in this SYS-CON.tv interview at Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Enthusiasm for the Internet of Things has reached an all-time high. In 2013 alone, venture capitalists spent more than $1 billion dollars investing in the IoT space. With "smart" appliances and devices, IoT covers wearable smart devices, cloud services to hardware companies. Nest, a Google company, detects temperatures inside homes and automatically adjusts it by tracking its user's habit. These technologies are quickly developing and with it come challenges such as bridging infrastructure gaps,...
SYS-CON Media announced that Centrify, a provider of unified identity management across cloud, mobile and data center environments that delivers single sign-on (SSO) for users and a simplified identity infrastructure for IT, has launched an ad campaign on Cloud Computing Journal. The ads focus on security: how an organization can successfully control privilege for all of the organization’s identities to mitigate identity-related risk without slowing down the business, and how Centrify provides ...
SAP is delivering break-through innovation combined with fantastic user experience powered by the market-leading in-memory technology, SAP HANA. In his General Session at 15th Cloud Expo, Thorsten Leiduck, VP ISVs & Digital Commerce, SAP, discussed how SAP and partners provide cloud and hybrid cloud solutions as well as real-time Big Data offerings that help companies of all sizes and industries run better. SAP launched an application challenge to award the most innovative SAP HANA and SAP HANA...
"SAP had made a big transition into the cloud as we believe it has significant value for our customers, drives innovation and is easy to consume. When you look at the SAP portfolio, SAP HANA is the underlying platform and it powers all of our platforms and all of our analytics," explained Thorsten Leiduck, VP ISVs & Digital Commerce at SAP, in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
"We help companies that are using a lot of Software as a Service. We help companies manage and gain visibility into what people are using inside the company and decide to secure them or use standards to lock down or to embrace the adoption of SaaS inside the company," explained Scott Kriz, Co-founder and CEO of Bitium, in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In his session at Internet of @ThingsExpo, James Kirkland, Chief Ar...