HAIKOU CITY, China, Nov. 15,
2019 /PRNewswire/ -- China Pharma Holdings, Inc. (NYSE
American: CPHI) ("China Pharma," the "Company" or "We"), an NYSE
American-listed corporation with a fully-integrated specialty
pharmaceuticals subsidiary based in China, today announced financial results for
the quarter ended September 30,
2019.
Third Quarter Highlights
- Revenue increased by 3.4% to $2.4
million in the third quarter 2019 from $2.3 million in the same period of 2018;
- Gross margin was 15.7% in the third quarter 2019, compared to
22.3% in the same period of 2018;
- Loss from operations was $0.6
million in the third quarter 2019 compared to $1.9 million in the same period of 2018, an
improvement of $1.3 million;
- Net loss was $0.7 million in the
third quarter 2019 compared to $1.9
million in the same period of 2018. Loss per common share
was $0.02 per basic and diluted share
in the third quarter 2019, compared to $0.04 per basic and diluted share in the same
period of 2018.
Ms. Zhilin Li, China Pharma's
Chairman and CEO, commented, "We experienced negative effects on
our sales from the strict implementation of the government policy
of controlling the proportion of the spending on drugs to the
patients' total expenditures in hospitals in recent quarters.
Management endeavors to vigorously promote sales through active
participation in recent provincial market openings to solicit new
drug tender offers and allow China Pharma to expand its presence in
these markets." Ms. Li continued, "In addition, we are experiencing
sustained pressure from the more stringent requirements of drug
registration standards, consistency evaluations, which has created
a challenging environment in our industry during this period. We
will continue actively adapting to the state policy guidance and
further evaluate market conditions for our current existing
products, pipeline products, and competition in the market, in
order to optimize our development strategy. We will simultaneously
actively implement the launch of our nutrition product."
Third Quarter Results
Revenue increased by 3.4% to $2.4
million for the three months ended September 30, 2019, as compared to $2.3 million for the three months ended
September 30, 2018.
Gross profit for the three months ended September 30, 2019 was $0.4 million, as compared to $0.5 million during the same period in 2018. Our
gross profit margin in the three months ended September 30, 2019 was 15.7% as compared to 22.3%
during the same period in 2018. The decrease in our gross profit
margin was mainly due to the increased ratio of fixed cost to
revenue.
Our selling expenses for the three months ended September 30, 2019 and 2018 were $0.6 million and $0.9
million, respectively. Selling expenses accounted for
25.8% of the total revenue in the three months ended September 30, 2019, as compared to 40.3% during
the same period in 2018.
Our general and administrative expenses were $0.3 million for each of the three months ended
September 30, 2019 and 2018. General
and administrative expenses accounted for 14.0% and 14.2% of our
total revenues in the three months ended September 30, 2019 and 2018, respectively.
Our research and development expenses for the three months ended
September 30, 2019 were $0.04 million, as compared to $0.06 million in the same period in 2018.
Research and development expenses accounted for 1.7% and 2.7% of
our total revenues in the three months ended September 30, 2019 and 2018, respectively. The
consistency evaluations discussed under the "Business Overview
& Recent Developments" section hereof is expected to have a
significant impact on all generic products not only in our pipeline
products, but also throughout the existing Chinese market for
similar generic products. Because of the continuous introduction of
detailed implementation rules under this policy, our pipeline
products did not experience any further development in the third
quarter of 2019.
Our bad debt expenses for the three months ended September 30, 2019 was $0.03 million, as compared to $1.13 million for the same period in 2018. The
decrease of bad debt expenses in this period was mainly due to the
decrease in the amount of accounts receivable that is turning to
over 2 years old in this period. Our bad debt allowance estimate
requires 70% of accounts receivable that are between 365 days and
720 days old, and 100% of accounts receivable that are greater than
720 days old.
Net loss for the three months ended September 30, 2019 was $0.7 million, or $0.02 per basic and diluted common share, as
compared to a net loss of $1.9
million, or $0.04 per basic
and diluted common share, for the same period a year ago. The
decrease in net loss was mainly the result of controls on
expenditures outweighed the impact of decrease in gross profit
margin.
Nine Months Results
For the nine months ended September 30,
2019, our sales revenue was $7.9
million, which represented a decrease of $1.2 million, or 13.3%, from the $9.1 million in the corresponding period of
2018.
Gross profit for the nine months ended September 30, 2019 was $1.2 million, compared to $2.1 million in the same period of 2018. Gross
profit margins for the nine months ended September 30, 2019 and 2018 were 15% and 24%,
respectively.
Our net losses for the nine months ended September 30, 2019 and 2018 were $2.0 million and $3.2
million, respectively, which represented an improvement of
$1.2 million for the period in 2019.
This improvement was mainly due to the decrease of bad debt
expenses in this period.
Financial Condition
As of September 30, 2019, the
Company had cash and cash equivalents of $0.8 million compared to $1.2 million as of December 31, 2018.
As of September 30, 2019, our net
accounts receivable was $0.7 million,
compared to $0.9 million as of
December 31, 2018.
For the nine months ended September 30,
2019, cash flow from operating activities was $1.4 million, as compared to $1.0 million for the same period in 2018.
About China Pharma Holdings, Inc.
China Pharma Holdings, Inc. is a specialty pharmaceutical
company that develops, manufactures and markets a diversified
portfolio of products, focusing on conditions with high incidence
and high mortality rates in China,
including cardiovascular, CNS, infectious, and digestive diseases.
The Company's cost-effective business model is driven by market
demand and supported by new 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 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. Such risks and uncertainties may
include, but are not limited to: 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.
- FINANCIAL TABLES FOLLOW -
CHINA PHARMA
HOLDINGS, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Unaudited)
|
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
2019
|
|
2018
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
761,606
|
|
$
1,186,587
|
Restricted
cash
|
|
489,208
|
|
1,273,940
|
Banker's
acceptances
|
|
-
|
|
20,579
|
Trade accounts
receivable, less allowance for doubtful
|
|
|
|
|
accounts of
$17,360,530 and $17,815,075, respectively
|
|
693,353
|
|
916,931
|
Other receivables,
less allowance for doubtful
|
|
|
|
|
accounts of $46,644
and $34,884, respectively
|
|
189,524
|
|
170,098
|
Advances to
suppliers
|
|
2,933
|
|
47
|
Inventory
|
|
3,973,373
|
|
5,054,975
|
Prepaid
expenses
|
|
129,248
|
|
123,759
|
Total Current
Assets
|
|
6,239,245
|
|
8,746,916
|
|
|
|
|
|
Advances for
purchases of intangible assets
|
|
16,595,462
|
|
17,069,587
|
Property, plant
and equipment, net
|
|
16,697,256
|
|
19,294,379
|
Operating lease
right of use asset
|
|
157,177
|
|
-
|
Intangible assets,
net
|
|
211,491
|
|
266,443
|
TOTAL
ASSETS
|
|
$
39,900,631
|
|
$
45,377,325
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Trade accounts
payable
|
|
$
1,158,067
|
|
$
1,060,934
|
Accrued
expenses
|
|
140,753
|
|
310,804
|
Other
payables
|
|
3,035,431
|
|
3,065,508
|
Advances from
customers
|
|
498,768
|
|
525,647
|
Other payables -
related parties
|
|
2,076,972
|
|
1,633,263
|
Operating lease
liability, current portion
|
|
88,996
|
|
-
|
Current portion of
construction loan facility
|
|
2,120,771
|
|
2,181,360
|
Bankers' acceptance
notes payable
|
|
489,208
|
|
1,273,940
|
Total Current
Liabilities
|
|
9,608,966
|
|
10,051,456
|
Non-current
Liabilities:
|
|
|
|
|
Construction loan
facility
|
|
2,120,771
|
|
4,362,720
|
Operating lease
liability, net of current portion
|
|
70,952
|
|
-
|
Deferred tax
liability
|
|
743,143
|
|
764,374
|
Total
Liabilities
|
|
12,543,832
|
|
15,178,550
|
Commitments and
Contingencies (Note 13)
|
|
|
|
|
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
|
Accumulated
deficit
|
|
(7,227,146)
|
|
(5,270,358)
|
Accumulated other
comprehensive income
|
|
10,950,161
|
|
11,835,349
|
Total
Stockholders' Equity
|
|
27,356,799
|
|
30,198,775
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
$
39,900,631
|
|
$
45,377,325
|
CHINA PHARMA
HOLDINGS, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
AND COMPREHENSIVE
LOSS
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
For the Three
Months
|
|
For the Nine
Months
|
|
|
Ended September
30,
|
|
Ended September
30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenue
|
|
$
2,376,844
|
|
$
2,298,472
|
|
$
7,875,525
|
|
$
9,087,867
|
Cost of
revenue
|
|
2,004,085
|
|
1,785,927
|
|
6,682,688
|
|
6,942,141
|
|
|
|
|
|
|
|
|
|
Gross
profit
|
|
372,759
|
|
512,545
|
|
1,192,837
|
|
2,145,726
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling
expenses
|
|
613,110
|
|
925,654
|
|
1,597,667
|
|
2,320,204
|
General and
administrative expenses
|
|
333,833
|
|
327,161
|
|
1,097,200
|
|
1,172,314
|
Research and
development expenses
|
|
39,716
|
|
62,059
|
|
175,642
|
|
107,946
|
Bad debt
expense
|
|
31,304
|
|
1,129,105
|
|
54,708
|
|
1,481,786
|
Total operating
expenses
|
|
1,017,963
|
|
2,443,979
|
|
2,925,217
|
|
5,082,250
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
|
(645,204)
|
|
(1,931,434)
|
|
(1,732,380)
|
|
(2,936,524)
|
|
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Interest
income
|
|
11,840
|
|
16,113
|
|
27,216
|
|
27,931
|
Interest
expense
|
|
(67,590)
|
|
(101,683)
|
|
(251,624)
|
|
(361,365)
|
Net other
expense
|
|
(55,750)
|
|
(85,570)
|
|
(224,408)
|
|
(333,434)
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes
|
|
(700,954)
|
|
(2,017,004)
|
|
(1,956,788)
|
|
(3,269,958)
|
Income
tax expense
|
|
-
|
|
160,485
|
|
-
|
|
111,910
|
Net
loss
|
|
(700,954)
|
|
(1,856,519)
|
|
(1,956,788)
|
|
(3,158,048)
|
Other comprehensive
income - foreign currency
|
|
|
|
|
|
|
|
|
translation
adjustment
|
|
(909,889)
|
|
(1,535,424)
|
|
(885,188)
|
|
(2,280,131)
|
Comprehensive
loss
|
|
$
(1,610,843)
|
|
$
(3,391,943)
|
|
$
(2,841,976)
|
|
$
(5,438,179)
|
Loss per
share:
|
|
|
|
|
|
|
|
|
Basic and
diluted
|
|
$
(0.02)
|
|
$
(0.04)
|
|
$
(0.04)
|
|
$
(0.07)
|
Weighted average
shares outstanding
|
|
43,579,557
|
|
43,579,557
|
|
43,579,557
|
|
43,579,557
|
CHINA PHARMA
HOLDINGS, INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
For the Nine
Months
|
|
|
Ended September
30,
|
|
|
2019
|
|
2018
|
Cash Flows from
Operating Activities:
|
|
|
|
|
Net loss
|
|
$
(1,956,788)
|
|
$
(3,158,048)
|
Depreciation and
amortization
|
|
2,261,800
|
|
2,499,114
|
Bad debt
expense
|
|
54,708
|
|
1,481,786
|
Deferred income
taxes
|
|
-
|
|
69,614
|
Inventory write
off
|
|
87,542
|
|
-
|
Changes in assets and
liabilities:
|
|
|
|
|
Trade accounts and
other receivables
|
|
(407,733)
|
|
(514,428)
|
Advances to
suppliers
|
|
(2,980)
|
|
106,981
|
Inventory
|
|
1,436,878
|
|
471,995
|
Trade accounts
payable
|
|
130,642
|
|
(516,263)
|
Accrued taxes
payable
|
|
23,321
|
|
(114,432)
|
Other payables and
accrued expenses
|
|
(201,831)
|
|
580,689
|
Advances from
customers
|
|
(12,670)
|
|
86,675
|
Prepaid
expenses
|
|
(9,211)
|
|
14,005
|
Net Cash Provided
by Operating Activities
|
|
1,403,678
|
|
1,007,688
|
|
|
|
|
|
Cash Flows from
Investing Activities:
|
|
|
|
|
Purchases of property
and equipment
|
|
(85,739)
|
|
(33,332)
|
Net Cash Used in
Investing Activities
|
|
(85,739)
|
|
(33,332)
|
|
|
|
|
|
Cash Flows from
Financing Activities:
|
|
|
|
|
Payments of
construction term loan
|
|
(2,188,463)
|
|
(2,303,410)
|
Loan from related
party
|
|
674,405
|
|
-
|
Repayments to related
party
|
|
(209,726)
|
|
-
|
Net Cash Used in
Financing Activities
|
|
(1,723,784)
|
|
(2,303,410)
|
|
|
|
|
|
Effect of Exchange
Rate Changes on Cash
|
|
(19,136)
|
|
(33,531)
|
Net (Decrease)
Increase in Cash and Cash Equivalents
|
|
(424,981)
|
|
(1,362,585)
|
Cash and Cash
Equivalents at Beginning of Period
|
|
1,186,587
|
|
2,030,214
|
Cash and Cash
Equivalents at End of Period
|
|
$
761,606
|
|
$
667,629
|
|
|
|
|
|
Supplemental Cash
Flow Information:
|
|
|
|
|
Cash paid for income
taxes
|
|
$
-
|
|
$
-
|
Cash paid for
interest
|
|
$
241,465
|
|
$
351,206
|
|
|
|
|
|
Supplemental
Noncash Investing and Financing Activities:
|
|
|
|
|
Issuance of banker's
acceptances
|
|
$
2,641
|
|
$
847,527
|
Accounts receivable
collected with banker's acceptances
|
|
532,537
|
|
462,642
|
Inventory purchased
with banker's acceptances
|
|
553,183
|
|
502,473
|
Right-of-use assets
obtained in exchange for operating lease obligations
|
|
231,130
|
|
-
|
View original
content:http://www.prnewswire.com/news-releases/china-pharma-holdings-inc-reports-third-quarter-2019-financial-results-300958976.html
SOURCE China Pharma Holdings, Inc.