surf1944
13 years ago
China Sky One Medical Announces Second Quarter 2011 Results
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Press Release Source: China Sky One Medical, Inc. On Tuesday August 9, 2011, 5:00 pm EDT
HARBIN, China, Aug. 9, 2011 /PRNewswire-Asia-FirstCall/ -- China Sky One Medical, Inc. ("China Sky One" or "the Company") (NASDAQ:CSKI - News), a leading fully integrated pharmaceutical company producing over-the-counter drugs in the People's Republic of China ("PRC"), today announced financial results for the second quarter of 2011.
Second Quarter 2011 Financial Highlights
Total revenues decreased 7.6% year-over-year to $37.7 million
The Company marketed 101 products, compared with 114 products in the quarter ended June 30, 2010
Gross profit fell 15.7% to $24.9 million
Operating income declined 39.6% to $8.3 million
GAAP net income, including a non-cash gain from change in the fair value of derivative warrant liability, decreased 50.2% year-over-year to $6.1 million, or $0.36 per diluted share
Excluding the non-cash gain, non-GAAP adjusted net income declined 42.0% to $5.9 million, or $0.35 per diluted share
"Our second quarter revenue declined 7.6% year-over-year, primarily reflecting the loss of two distribution relationships in the third quarter of 2010. We continue to aggressively pursue new customers to distribute our broad portfolio of pharmaceutical products, while investing in China Sky One's future, as exemplified by our winning bid on land use rights for land in Harbin's Song Bei District. We intend to build a research and development center, an injection manufacturing facility, a logistics center and an office building on the land during the first phase of development, which we expect to complete by mid-2012," said Mr. Yan-Qing Liu, Chairman and CEO of China One Medical, Inc. "Despite the challenges of the past year, we are optimistic that we can reestablish robust revenue and earnings growth at China Sky One Medical by continuing to invest in R&D, securing new distributor relationships and identifying uses for our strong balance sheet and cash flow."
Second Quarter 2011 Results
In the second quarter of 2011, China Sky One's total revenues decreased 7.6% to $37.7 million from $40.8 million in the same quarter last year, largely reflecting the continuing impact of terminated business relationships with a domestic distributor and an overseas sales agent during the third quarter of 2010, which negatively impacted the sales of the Company's Ointments, Patches, Sprays and Diagnostic Kits categories. These two distributors accounted for 0% and 17.4% of the Company's overall revenue in the second quarter of 2011 and second quarter of 2010, respectively.
By product category, lower sales from Ointments, Patches, Sprays and Drops contributed to the Company's overall year-over-year revenue decline, offset somewhat by top-line growth in Wash Fluids, Dignostic Kits, Suppositories and the Others category.
Sales of ointments declined 28.5% year-over-year to $8.3 million in the second quarter of 2011, primarily due to a $2.6 million year-over-year decline in the Company's Hemorrhoids Ointment product.
Sales of patches declined 34.2% year-over-year to $6.4 million in the second quarter of 2011. The decrease in patch product sales was primarily due to a 63.3% decrease in Slim Patch sales, along with sales declines of several other Patch products, primarily due the termination of a key distributor relationship in the third quarter of 2010.
Sales of wash fluids increased 133.5% year-over-year to $4.3 million in the second quarter of 2011, driven by strong sales of Metronidazole and Chlorhexidine wash fluids.
Sales of spray products decreased 22.6% year-over-year to $4.0 million in the second quarter of 2011, primarily due to lower sales of YinKe Spray and JieYin Spray.
Revenue from drops decreased 33.6% year-over-year to $1.9 million in the second quarter of 2011, primarily due to lower sales of Naphazoline Hydrochloride Eye Drops.
Diagnostic kit sales increased year-over-year by 36.4% to $3.2 million in the second quarter of 2011, primarily due to increased sales of Cardiac Arrest Early Examination Kits.
Sales of suppositories grew by 12.9% year-over-year to $2.6 million in the second quarter of 2011, driven by increased sales of Policresulen Vaginal Suppositories and Chlorhexidine Acetate Hemorrhoids Suppositories.
Sales from the Others product category increased by 43.0% year-over-year to $7.2 million in the second quarter of 2011. Higher revenues from Other Products were mainly driven by the sale of the thirteen additional products launched after the first quarter of 2010.
Gross profit declined 15.7% to $24.9 million in the second quarter of 2011. Gross margin in the quarter was 66.1%, as compared to 72.5% in the second quarter of 2010, mainly due to increases in the price of certain raw materials used to produce the Company's products, and lower sales prices of certain products due to the competitive sales market.
Operating expenses increased 5.1% year-over-year to $16.6 million in the second quarter of 2011. The increase was principally due to $0.6 million higher depreciation and amortization expenses and $0.5 million higher selling expenses, somewhat offset by $0.3 million lower general and administrative expenses. Second quarter 2011 operating income was $8.3 million, or 22.0% or revenue, as compared to an operating income of $13.7 million, or 33.6% of revenue, in the same period a year ago.
Total other income was $0.3 million in the second quarter of 2011, as compared to $2.1 million in the prior year quarter. The decrease reflected non-cash gain related to the change in the fair value of our derivative warrant liability related to the private placement in January 2008, which was $0.2 million in the second quarter of 2011 and $2.1 million in the same period a year ago.
Provision for income taxes was $2.4 million in the second quarter of 2011, as compared to $3.6 million in the same period last year.
GAAP net income for the second quarter of 2011 was $6.1 million, as compared to $12.2 million in the second quarter of 2010. Excluding the non-cash gain related to the change in fair value of derivative warrant liability, the Company's non-GAAP adjusted net income declined 42.0% to $5.9 million, or $0.35 per diluted share, as compared to $10.2 million, or $0.60 per diluted share, in the prior year period.
Financial Condition
As of June 30, 2011, China Sky One had $44.3 million in cash and equivalents, with a current ratio of 6.2. Working capital was approximately $61.2 million, up from $57.4 million at December 31, 2010. Stockholders' equity at June 30, 2011, was $179.9 million, 9.7% higher than the $164.0 million recorded at December 31, 2010.
Accounts receivable turnover days decreased to 51.6 for the six months ended June 30, 2011, as compared to 53.4 days in the same period of 2010. Inventory turnover days increased to 46.0 for the first six months of 2011 from 30.4 days in the year ago period.
The Company generated $13.0 million in net cash flow from operating activities in the first six months of 2011, compared to $19.3 million in the year ago comparable period. Management believes current working capital and borrowing capabilities are sufficient to cover their operating and capital requirements in the near future.
Conference Call
China Sky One will conduct a conference call at 9:30 a.m. Eastern Time (ET) on Wednesday, August 10, 2011, to discuss second quarter 2011 financial results. A full version of the Company's quarterly report will be filed with the SEC on Form 10-Q prior to the call. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: (866) 395-5819. International callers should dial (706) 643-6986. The Conference ID for this call is 89304197. If you are unable to participate in the call at this time, a replay will be available for two weeks starting on Wednesday, August 10, 2011 at 11:30 a.m. ET. To access the replay, dial (855) 859-2056, international callers dial (404) 537-3406. The Conference Replay Passcode is 89304197.
surf1944
13 years ago
China Sky One Medical Announces First Quarter 2011 Results
Press Release Source: China Sky One Medical, Inc. On Tuesday May 10, 2011, 11:00 pm EDT
HARBIN, China, May 10, 2011 /PRNewswire-Asia-FirstCall/ -- China Sky One Medical, Inc. ("China Sky One Medical" or "the Company") (NASDAQ:CSKI - News), a leading fully integrated pharmaceutical company in the People's Republic of China ("PRC"), today announced financial results for the first quarter of 2011.
First Quarter 2011 Highlights
Total revenue declined 1.9% year-over-year to $28.4 million, but increased sequentially by 5.5% compared to fourth quarter 2010 revenue
Gross profit decreased 10.8% year-over-year to $19.3 million
Operating income decreased 34.4% year-over-year to $6.6 million
GAAP net income, including a non-cash gain from change in the fair value of derivative warrant liability, decreased 51.4% year-over-year to $6.1 million, or $0.36 per diluted share
Excluding the non-cash gain from change in the fair value of derivative warrant liability, non-GAAP adjusted net income decreased 38.1% to $4.7 million, or $0.28 per diluted share
The Company acquired 13 new drug production licenses from Heilongjiang Traditional Chinese Medical University
"In the first quarter of 2011, we saw encouraging early signs of a sales recovery as we took aggressive steps to rebuild and expand our distribution base after the loss of two major distributor relationships during the third quarter of 2010. Sales have been spread out across a number of new distributors and we begin 2011 with a more diversified client base compared to prior years. Not one of our customers accounted for more than 10% of our total revenue or accounts receivable in the quarter ending March 31, 2011," said Mr. Yan-Qing Liu, the Company's Chairman and CEO. "A more diversified and richer product portfolio also favorably impacted first quarter results and we plan to reinforce China Sky One's long term growth prospects by continuing to invest in our higher margin branded portfolio while introducing additional new drugs in 2011 and beyond."
First Quarter 2011 Results
In the first quarter of 2011, China Sky One's total revenues decreased 1.9% to $28.4 million from $28.9 million in the same quarter last year, reflecting sales declines in the Company's Patches, Ointments and Sprays product categories, partially offset by sales increases in its Wash Fluids, Diagnostic Kits, Drops and Others product categories. During the first quarter of 2011, the Company manufactured and marketed 117 products, compared to 89 products in the first quarter of 2010.
Sales of Ointments decreased 14.6% year-over-year to $6.7 million, or approximately 23.5% of total sales in the first of quarter 2011, primarily due to lower sales of the Company's Hemorrhoids Ointment. Revenue generated from the Hemorrhoids Ointment declined from $2.3 million in the first quarter of 2010 to $0.8 million this quarter, mainly due to the SFDA's enforcement of new regulations on the advertisement of certain medicinal products, which negatively impacted our certain of our distributors' sales. Seven new Ointment products the Company launched after the first quarter of 2010 contributed incremental sales of $0.3 million during the first quarter of 2011, which partially offset the overall Ointments sales decrease.
Sales of Patches declined 41.9% year-over-year to $4.8 million, or approximately 16.8% of total sales in the first quarter of 2011, reflecting lower sales of the Company's Pain Relief Patch and Asthma Patch products after the termination of a key distribution relationship during the third quarter of 2010.
Sales of Wash Fluids increased 206.6% year-over-year to $2.7 million, or approximately 9.5% of total sales in the first quarter of 2011, mainly driven by higher sales of the Company's Metronidazole and Chlorhexidine Washing Fluids after adding a new distributor in the second quarter of 2010.
Sales of Sprays decreased 15.3% year-over-year to $2.5 million, or approximately 9.0% of total sales in the first quarter of 2011, primarily due to the lower sales of several of the Company's Spray products.
Sales of Drops increased 25.4% year-over-year to $2.3 million, or approximately 8.0% of total sales in the first quarter of 2011, mainly attributable to incremental sales of six new Drops products launched after the first quarter of 2010.
Sales of Diagnostic Kits climbed 32.5% year-over-year to $1.9 million, or approximately 6.8% of total sales in the first quarter of 2011, primarily driven by the increased sales of the Company's Cardiac Arrest Early Examination Kit.
Sales of Suppositories increased 60.0% year-over-year to $1.9 million, or approximately 6.8% of total sales in the first quarter of 2011, due to higher sales of the Company's existing Suppositories products and incremental revenue from two new Suppositories products the Company launched after the first quarter of 2010.
Sales of products in the Others category grew 22.5% year-over-year to $5.5 million, or approximately 19.5% of total sales in the first quarter of 2011, reflecting incremental revenues from thirteen products the Company launched after the first quarter of 2010.
Gross profit decreased 10.8% year-over-year to $19.3 million in the first quarter of 2011. Gross margin in the quarter was 68.0%, compared to 74.8% in the first quarter of 2010. The gross margin decline on a year-over-year basis reflects an increase in certain raw material prices, as well as lower average selling prices the Company extended to certain distributors with extensive market channels, as part of the Company's sales promotion strategy.
Operating expenses increased 10.1% year-over-year to $12.7 million in the first quarter of 2011, due to $0.4 million of incremental selling expenses, $0.3 million of higher research and development expenditures, and $0.5 million of increased depreciation and amortization expenses.
First quarter 2011 operating income was $6.6 million, or 23.4% of total sales, as compared to $10.1 million, or 35.0% of total sales in the first quarter of the prior year.
Total other income, which includes a non-cash gain related to change in the fair value of derivative warrant liability related to the Company's issuance of warrants in the private placement it completed in January 2008, was $1.4 million in the first quarter of 2011, as compared to $4.9 million in the same quarter of the prior year.
Provision for income taxes was $1.9 million in the first quarter of 2011, as compared to $2.5 million in the same period last year.
GAAP net income for the first quarter of 2011 was $6.1 million, or $0.36 per diluted share, as compared to $12.6 million, or $0.74 per diluted share, in the first quarter of 2010.
Excluding the non-cash gain of $1.4 million related to the change in fair value of derivative warrant liability, the Company's non-GAAP adjusted net income decreased 38.1% year-over-year to $4.7 million, or $0.28 per diluted share, in the first quarter of 2011, as compared to net income of $7.66 million, or $0.45 per diluted share in the first quarter 2010.
Financial Condition
As of March 31, 2011, China Sky One had $48.1 million in cash and equivalents, with a current ratio of 6.9. Working capital was approximately $61.0 million, up from $57.4 million at the end of 2010. Stockholders' equity at March 31, 2011, was $171.6 million, a 4.6% increase over the $164.0 million recorded at December 31, 2010.
Accounts receivable turnover days decreased to 58.3 days in the three months ended March 31, 2011, as compared to 61.9 days in the same period of 2010. Inventory turnover days increased to 44.7 days in the first quarter of 2011 from 28.6 days in the first quarter of 2010. This increase primarily reflected management's decision to increase raw material inventory in response to anticipated raw material price increases as well as to fulfill expected sales in the coming period.
The Company generated $9.0 million in net cash flow from operating activities in the first quarter of 2011, down from $12.6 million in the year ago quarter. The decrease was primarily attributable to lower income from operations and an increased level of inventories. In the first quarter of 2011, approximately $4.4 million was spent to purchase thirteen drug batch numbers from Heilongjiang Traditional Chinese Medical University. The Company is preparing for trial production and defining optimal production process for these thirteen products, which the Company's management believes could be introduced to the market as soon as the fourth quarter of 2011.
Business Outlook
On December 21, 2010, China Sky One entered into an agreement with Heilongjiang Tang Wang He Forest Bureau that gives the Company the right to grow and harvest herbs, among other plants, on approximately 74,000 acres of forested land in the Xiao Xing'an Mountain region. The Company's management believes this arrangement will provide its TCM business with a hedge against fluctuations in raw material prices. The Company plans to evaluate the land in the second quarter of 2011 and subsequently develop a strategic plan for its future operation.
"We commenced 2011 by engaging several new distributors and recently acquired thirteen new drug licenses, which we expect to launch as soon as the fourth quarter of this year," said Mr. Liu. "Throughout 2011, we anticipate a more strict regulated medicinal market in China, which may impose more challenges on the Company's operating performance. However, given our strong management team, rich product portfolio, outstanding R&D capability, and extensive sales network, we believe we are in a good position to compete and improve shareholder value."
Conference Call
China Sky One Medical will conduct a conference call at 9:00 a.m. Eastern Time (ET) on Thursday, May 12, 2011, to discuss its first quarter 2011 financial results. To participate in the live conference call, please dial the following number five to ten minutes prior to the scheduled conference call time: 866-395-5819. International callers should dial 706-643-6986. The Conference ID for this call is 63344218.
If you are unable to participate in the call at this time, a replay will be available for two weeks starting on Thursday, May 12, 2011 at 12:00 a.m. ET. To access the replay, dial 800-642-1687, international callers dial 706-645-9291. The Conference Replay Passcode is 63344218.
mlkrborn
14 years ago
7.05 today! down 2.64 on news contracts canceled.
NEW YORK (TheStreet) -- Two China pharmaceutical stocks China Sky One Medical(CSKI) and Skystar Bio-Pharmaceuticals(SKBI) reported robust earnings for the second quarter ended June 30. The stocks gained 4.2% and 11.5%, respectively, on the day the results were announced. Surprisingly, since then, China Sky One Medical has shed 12.8%, while Skystar has declined 16%. As there were no unfavorable developments that took place within these companies, one could imagine that investors preferred exiting the stocks on a rally.
More on CSKI
China Sky One, Idenix: Volume Movers
This decline compares to the 5% drop of the S&P 500, a 4% decrease in Bank of New York (BNY) China ADR Index, and a 3% fall on the NYSE Arca China Index during the same period. Both BNY and Arca China Index track the performance of China ADRs listed on the U.S. exchange.
The drop in stock prices offers investors an attractive buying opportunity. Moreover, these stocks seem to be relatively undervalued as they are trading at PEs of 4.27 and 4.47, respectively, lower than peers such as Pfizer(PFE), Merck(MRK) and Novartis AG,(NVS), which are trading at PEs of 12.88, 8.29 and 12.50, respectively.
China's pharmaceutical market, currently the sixth-largest globally, is valued at more than $25 billion and is expected to rank third by 2011, based on the IMS Health estimates. According to a report by Pharmaceutical Drug Manufacturers, China's pharmaceutical market is expected to grow at more than 20% annually, contributing 21% to overall global growth through 2013.
During the second quarter, China Sky One Medical reported adjusted earnings of 60 cents per share, topping analysts' estimates of 53 cents per share. Revenue grew 26.7% year-over-year to $40.76 million from $32.18 million. The company does not have any debt obligations. It did not provide an update on its FY 2010 guidance as it is currently in contract renewal discussions with a few distributors.
On August 31, Global Hunter Securities maintained a buy rating on the stock, lowering its price estimates from $20 to $15 on concerns that the negotiations with distributors may not necessarily yield positive results.
However, the company has already been addressing this issue by training a professional team to better co-operate with its distributors. It is also creating new policies and incentives to encourage better performance by the distributors.
Skystar Bio-Pharmaceuticals, on the other hand, reported earnings of 33 cents per share as opposed to a loss of 3 cents per share a year ago. Earnings more than doubled from the previous quarter. Analysts expected the company to report earnings of 29 cents per share.
Revenue soared 32% year-over-year to $8.26 million. For the full year, the company reaffirmed its revenue guidance of $45.5 million to $47.5 million. On August 23, Rodman & Renshaw reiterated a market outperform rating to the stock with a price target of $15, implying a 56% upside over the current levels.
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