3Q12 Revenue was RMB75.4 Million ($12.0
Million)
3Q12 Net Income was RMB2.5 Million ($0.4
Million)
3Q12 Non-GAAP Adjusted Net Income was RMB11.6
Million ($1.8 Million)
Live conference call to be held Monday, November
26, 2012 at 8:00 am ET
China Nuokang Bio-Pharmaceutical Inc. (Nasdaq:NKBP) ("Nuokang" or
the "Company"), a leading China-based biopharmaceutical company
focused on the research, development, manufacture, marketing and
sales of hospital-based medical products, today announced its
unaudited financial results for the third quarter of 2012.
Mr. Baizhong Xue, the Company's Chairman and Chief Executive
Officer, stated, "We are pleased to report a solid third quarter
that has demonstrated steady sales performance and continuing
progress with non-GAAP profitability. Revenue of RMB69.9 million
from Baquting, our flagship product, was largely in line with our
target. Sales volume of Baquting has consistently increased during
the first three quarters of this year. We are encouraged by overall
longitudinal improvements that the Company has made so far for
2012."
Chairman Xue continued, "We recently celebrated the 15th
anniversary of Nuokang. During the past decade and a half, our
management and staff have striven to make Nuokang one of China's
leading biopharmaceutical companies. We are extremely grateful for
the support of our investors and very proud of the market-leading
position we have achieved in the hemocoagulase sector. We also see
tremendous potential with our increasingly diversified product
portfolio. We remain committed to investing in R&D to support
innovation of novel products as well as improvements to our proven
product lines."
Third Quarter 2012 Financial Highlights
- Revenue was RMB75.4 million ($12.0 million)1, compared to
RMB87.2 million in the prior year period;
- Baquting revenue was RMB69.9 million ($11.1 million), compared
to RMB83.9 million in the prior year period;
- Gross profit was RMB66.4 million ($10.6 million), compared to
RMB75.5 million in the prior year period;
- Gross margin was 88.0%, compared to 86.6% in the prior year
period;
- Operating income was RMB5.1 million ($0.8 million), compared to
RMB16.5 million in the prior year period;
- Net income was RMB2.5 million ($0.4 million), or RMB0.13
($0.02) per diluted ADS2, compared to RMB7.6 million, or RMB0.39
per diluted ADS, in the prior year period; and
- Non-GAAP adjusted net income was RMB11.6 million ($1.8
million), compared to RMB13.1 million in the prior year
period.
Third Quarter 2012 Financial Performance
Revenue for the third quarter of 2012 was RMB75.4 million ($12.0
million), compared to RMB87.2 million in the third quarter of 2011.
Revenue from Baquting decreased to RMB69.9 million ($11.1 million)
in the third quarter of 2012 from RMB83.9 million in the third
quarter of 2011 but was in line sequentially with RMB68.9 million
in the second quarter of 2012. In terms of volume, Baquting sales
saw both annual and sequential increases during the reporting
period. The year-on-year decrease in Baquting revenue was primarily
attributable to changes in the Company's sales channel mix during
the period. Baquting revenue as a percentage of total revenue was
92.7% in the third quarter of 2012, compared to 96.1% in the third
quarter of 2011. Revenue from other products was RMB5.5 million
($0.9 million) in the third quarter of 2012, compared to RMB3.3
million in the third quarter of 2011, mainly attributable to
increased Kaitong sales.
Gross profit for the third quarter of 2012 was RMB66.4 million
($10.6 million), compared to RMB75.5 million for the third quarter
of 2011. Gross margin for the third quarter of 2012 was 88.0%, an
increase from 86.6% in the third quarter of 2011.
Operating income for the third quarter of 2012 was RMB5.1
million ($0.8 million), compared to RMB16.5 million for the third
quarter of 2011. The year-over-year decrease was primarily
attributable to expenses relating to the Company's going-private
transaction.
Research and development expenses for the third quarter of 2012
were RMB4.1 million ($0.7 million), compared to RMB4.6 million for
the third quarter of 2011. Research and development expenses as a
percentage of revenue was 5.5% for the third quarter of 2012, which
was largely in line with 5.3% for the third quarter of 2011 and
within the Company's expected range.
Selling, marketing and distribution expenses for the third
quarter of 2012 were RMB37.6 million ($6.0 million), compared to
RMB41.6 million for the third quarter of 2011. Selling, marketing
and distribution expenses as a percentage of revenue for the third
quarter of 2012 was 49.9%, which was largely in line with 47.7% in
the third quarter of 2011. Selling, marketing and distribution
expenses for the third quarter of 2012 primarily consisted of the
Company's investment in sales and marketing for Baquting as well as
the Company's continued investment in the commercialization of
Kaitong and ALA.
General and administrative expenses for the third quarter of
2012 were RMB19.5 million ($3.1 million), compared to RMB12.8
million for the third quarter of 2011. The increase in general and
administrative expenses was primarily attributable to the Company's
privatization expenses amounting to RMB7.6 million ($1.2
million).
Provision for income taxes for the third quarter of 2012 was
RMB3.6 million ($0.6 million), compared to RMB7.1 million for the
third quarter of 2011. The Company's effective tax rate was 58.9%
during the third quarter of 2012, compared to 48.3% during the
third quarter of 2011, primarily as a result of more non-deductible
expenses such as privatization expenses incurred in this
period.
Net income for the third quarter of 2012 was RMB2.5 million
($0.4 million), or RMB0.13 ($0.02) per diluted ADS, compared to
RMB7.6 million, or RMB0.39 per diluted ADS, for the third quarter
of 2011.
Non-GAAP adjusted net income for the third quarter of 2012,
excluding foreign exchange losses, ESOP related charges, ASC 740
adjustment and privatization expenses, was RMB11.6 million ($1.8
million), compared to RMB13.1 million for the third quarter of
2011.
For the third quarter of 2012, the Company had approximately
154.4 million weighted average diluted ordinary shares outstanding,
or 19.3 million weighted average diluted ADSs.
As of September 30, 2012, the Company had cash and cash
equivalents and other short-term investments of RMB185.9 million
($29.8 million), compared to RMB179.4 million as of December 31,
2011.
Nine Months Ended September 30, 2012 Financial
Performance
Revenue decreased 9.8% to RMB208.6 million ($33.2 million) for
the nine months ended September 30, 2012 from RMB231.3 million for
the nine months ended September 30, 2011. During this same time
period, gross profit decreased 9.8% to RMB182.7 million ($29.1
million) from RMB202.7 million and operating income decreased by
65.7% to RMB19.1 million ($3.0 million) from RMB55.5 million.
Net income decreased 58.0% to RMB13.7 million ($2.2 million), or
RMB0.09 ($0.01) per diluted ADS from RMB32.7 million, or RMB0.21
per diluted ADS, for the nine months ended September 30, 2011.
Weighted average number of diluted ordinary shares outstanding was
approximately 154.2 million for the nine months of 2012, or 19.3
million ADSs.
Non-GAAP Measures
Adjusted net income is presented to better illustrate the
Company's ongoing and core operational results. Adjusted net income
is defined as net income excluding foreign exchange losses, ESOP
related charges, ASC 740 adjustment and the Company's privatization
expenses. Adjusted net income may be calculated differently, and
therefore the Company's adjusted net income may not be comparable
to similarly titled measures of other companies. Adjusted net
income is not a measure of financial performance under U.S.
generally accepted accounting principles (GAAP), and should not be
considered in isolation or as an alternative to net income, cash
flows from operating activities and other measures determined in
accordance with GAAP. Items excluded from adjusted net income are
significant and necessary components to the operations of the
Company's business, and, therefore, adjusted net income should only
be used as a supplemental measure of operating performance.
Conference Call
The Company will hold a conference call at 8:00 a.m. ET on
Monday, November 26, 2012 to discuss the third quarter 2012
financial results. Listeners may access the call by dialing:
United States toll free: |
1-855-500-8701 |
China toll free:
|
400-1200654 |
Hong Kong toll free:
|
800-903737 |
United Kingdom toll
free: |
0800-0159724 |
International:
|
65-6723-9385 |
Conference ID: |
64309501 |
A live webcast and replay of the earnings call will also be
available through the Company's website www.nkbp.com.
About China Nuokang Bio-Pharmaceutical Inc.
China Nuokang Bio-Pharmaceutical Inc. (Nasdaq:NKBP) is a leading
biopharmaceutical company in China focused on the research,
development, manufacture, marketing and sales of hospital-based
medical products. The Company provides a diversified portfolio of
products across more than 4,200 hospitals in China. Nuokang's
principal products include Baquting®, China's leading hemocoagulase
product by market share, Kaitong®, a lipid emulsion alprostadil
product for the treatment of peripheral vascular diseases,
cardiocerebral microcirculation disorders and post-surgery
thrombosis; and alpha lipoic acid capsules, or ALA, an antioxidant
product that addresses diabetic neuropathy. The Company's product
pipeline includes product candidates under development in
hematological, cardiovascular and cerebrovascular disease
diagnosis, treatment and prevention. Please visit www.nkbp.com for
more information.
Safe-Harbor Statement
This press release contains statements of a forward-looking
nature. These statements, including the management quotations and
the statements relating to the Company's new product development,
are made under the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, including certain plans,
expectations, goals, and projections, which are subject to numerous
assumptions, risks, and uncertainties. These forward-looking
statements may include, but are not limited to, statements
containing words such as "may," "could," "would," "plan,"
"anticipate," "believe," "estimate," "predict," "potential,"
"expects," "intends" and "future" or similar expressions. Among
other things, the statements relating to the Company's expected
progress on the product portfolio and future financial results may
contain forward-looking statements. These forward-looking
statements speak only as of the date of this press release and are
subject to change at any time. These forward-looking statements are
based upon management's current expectations and are subject to a
number of risks, uncertainties and contingencies, many of which are
beyond the Company's control that may cause actual results, levels
of activity, performance or achievements to differ materially from
any future results, levels of activity, performance or achievements
expressed or implied by such forward-looking statements. The
Company's actual results could differ materially from those
contained in the forward-looking statements due to a number of
factors, including those described under the heading "Risk Factors"
in the Company's filings with the U.S. Securities and Exchange
Commission, including its annual report on Form 20-F.
1This announcement contains translations of certain Renminbi
amounts into US dollars at specified rates solely for the
convenience of readers. Unless otherwise noted, all translations
from Renminbi to US dollars as of and for the quarter ended
September 30, 2012, were made at the noon buying rate of RMB6.2848
to USD1.00 on September 28, 2012 in the City of New York for cable
transfers in Renminbi per US dollar as certified for customs
purposes by the Federal Reserve Bank of New York. China Nuokang
Bio-Pharmaceutical Inc. makes no representation that the Renminbi
or US dollar amounts referred to in this press release could have
been or could be converted into US dollars or Renminbi, at any
particular rate or at all.
2The Company's American Depositary Shares, which are traded on
the NASDAQ, each of which represents eight ordinary shares of the
Company.
CONSOLIDATED STATEMENTS
OF INCOME |
FOR THE QUARTERS ENDED
SEPTEMBER 30, 2011 AND 2012 |
|
|
|
|
|
|
|
|
3Q 2011 |
3Q 2012 |
Nine Months
2011 |
Nine Months 2012 |
|
(RMB'000) |
(RMB'000) |
(US$'000) |
(RMB'000) |
(RMB'000) |
(US$'000) |
|
|
|
|
|
|
|
Net revenue |
87,247 |
75,397 |
11,997 |
231,253 |
208,587 |
33,189 |
Cost of revenue |
(11,716) |
(9,019) |
(1,435) |
(28,602) |
(25,857) |
(4,114) |
|
|
|
|
|
|
|
Gross
profit |
75,531 |
66,378 |
10,562 |
202,651 |
182,730 |
29,075 |
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
Research and development costs |
(4,605) |
(4,136) |
(658) |
(12,102) |
(11,537) |
(1,836) |
Selling, marketing and distribution
expenses |
(41,620) |
(37,628) |
(5,987) |
(99,407) |
(105,219) |
(16,742) |
General and administrative expenses |
(12,787) |
(19,514) |
(3,105) |
(35,657) |
(46,918) |
(7,465) |
|
|
|
|
|
|
|
Total operating expenses |
(59,012) |
(61,278) |
(9,750) |
(147,166) |
(163,674) |
(26,043) |
|
|
|
|
|
|
|
Operating
profit |
16,519 |
5,100 |
812 |
55,485 |
19,056 |
3,032 |
Interest income |
606 |
1,184 |
188 |
1,218 |
2,789 |
444 |
Interest expense |
(831) |
(236) |
(38) |
(2,970) |
(710) |
(113) |
Foreign exchange (losses) gain |
(1,579) |
100 |
16 |
(4,475) |
362 |
58 |
Other loss, net |
(78) |
(28) |
(4) |
(175) |
(64) |
(10) |
|
|
|
|
|
|
|
Income before income tax expense |
14,637 |
6,120 |
974 |
49,083 |
21,433 |
3,411 |
Income tax expense |
(7,069) |
(3,605) |
(574) |
(16,472) |
(7,727) |
(1,229) |
|
|
|
|
|
|
|
Net
income |
7,568 |
2,515 |
400 |
32,611 |
13,706 |
2,182 |
|
|
|
|
|
|
|
Net (income) loss attributable to
non-controlling interest |
45 |
(2) |
-- |
105 |
(3) |
-- |
|
|
|
|
|
|
|
Net income attributed to ordinary
shares |
7,613 |
2,513 |
400 |
32,716 |
13,703 |
2,182 |
|
|
|
|
|
|
|
Net income per share |
|
|
|
|
|
|
Basic |
0.05 |
0.02 |
-- |
0.21 |
0.09 |
0.01 |
Diluted |
0.05 |
0.02 |
-- |
0.21 |
0.09 |
0.01 |
|
|
|
|
|
|
|
Shares used in net income
pershare computation |
|
|
|
|
|
Basic |
156,359,522 |
153,681,734 |
153,681,734 |
156,350,951 |
153,560,668 |
153,560,668 |
Diluted |
157,631,522 |
154,390,734 |
154,390,734 |
157,231,116 |
154,246,544 |
154,246,544 |
|
|
|
|
|
|
|
Net income per ADS |
|
|
|
|
|
|
Basic |
0.39 |
0.13 |
0.02 |
1.67 |
0.71 |
0.11 |
Diluted |
0.39 |
0.13 |
0.02 |
1.66 |
0.71 |
0.11 |
|
|
|
|
|
|
|
Shares used in net income
per ADS computation |
|
|
|
|
|
Basic |
19,544,940 |
19,210,217 |
19,210,217 |
19,543,869 |
19,195,084 |
19,195,084 |
Diluted |
19,703,940 |
19,298,842 |
19,298,842 |
19,653,890 |
19,280,818 |
19,280,818 |
|
CONSOLIDATED BALANCE
SHEETS |
AS OF DECEMBER 31, 2011
and SEPTEMBER 30, 2012 |
|
|
|
|
|
December 31, |
September 30, |
|
2011 |
2012 |
|
(RMB'000) |
(RMB'000) |
(US$'000) |
|
|
|
|
ASSETS |
|
|
|
Current assets: |
|
|
|
Cash and cash equivalents |
179,385 |
120,212 |
19,240 |
Restricted cash |
5,410 |
-- |
-- |
Short-term investments |
-- |
65,690 |
10,513 |
Accounts receivable (net of allowance for
doubtful accounts of RMB393,860 and RMB393,860 (US$63,034) as of
December 31, 2011 and September 30, 2012, respectively) |
60,767 |
52,776 |
8,446 |
Bills receivable |
109,256 |
99,013 |
15,846 |
Inventories |
15,846 |
20,157 |
3,226 |
Prepayments |
18,020 |
22,003 |
3,521 |
Other receivables |
7,203 |
5,229 |
837 |
Prepaid income tax |
8,179 |
14,838 |
2,375 |
Deferred tax assets |
1,040 |
446 |
71 |
|
|
|
|
Total current assets |
405,106 |
400,364 |
64,075 |
|
|
|
|
Non-current assets: |
|
|
|
Property, plant and equipment, net |
214,171 |
230,478 |
36,887 |
Land use rights, net |
35,121 |
34,611 |
5,539 |
Intangible assets, net |
21,212 |
19,429 |
3,109 |
Other Investments |
3,414 |
3,414 |
546 |
Prepayments |
15,884 |
31,640 |
5,064 |
Deferred tax assets |
7,406 |
7,326 |
1,172 |
|
|
|
|
Total non-current assets |
297,208 |
326,898 |
52,317 |
|
|
|
|
TOTAL ASSETS |
702,314 |
727,262 |
116,392 |
|
|
|
|
LIABILITIES AND SHAREHOLDERS'
EQUITY |
|
|
|
Current liabilities: |
|
|
|
Short-term bank loans |
7,000 |
7,000 |
1,120 |
Accounts payable |
1,501 |
3,031 |
485 |
Accrued expenses and other payables |
34,863 |
38,799 |
6,209 |
Income tax payable |
3,312 |
2,968 |
475 |
Unrecognized tax benefits |
2,656 |
5,763 |
922 |
Total current liabilities |
49,332 |
57,561 |
9,211 |
|
|
|
|
Non-current
liabilities: |
|
|
|
Deferred tax liabilities |
2,036 |
2,336 |
374 |
Deferred government grants |
23,185 |
26,697 |
4,273 |
Long-term payable |
12,934 |
13,494 |
2,160 |
Total non-current liabilities |
38,155 |
42,527 |
6,807 |
|
|
|
|
Commitments and
contingencies |
-- |
-- |
-- |
|
|
|
|
Shareholders' equity: |
|
|
|
Ordinary shares (par value US$0.0005 per
share, 474,200,000 shares authorized and 157,906,470 shares issued
and outstanding as of December 31, 2011; 474,200,000 shares
authorized and 157,330,734 shares issued and outstanding as of
September 30, 2012) |
581 |
580 |
93 |
Additional paid-in capital |
469,107 |
469,297 |
75,107 |
Retained earnings |
143,180 |
155,335 |
24,860 |
Total shareholders'
equity |
612,868 |
625,212 |
100,060 |
|
|
|
|
Non-controlling
interests |
1,959 |
1,962 |
314 |
|
|
|
|
TOTAL EQUITY |
614,827 |
627,174 |
100,374 |
|
|
|
|
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY |
702,314 |
727,262 |
116,392 |
|
|
|
|
|
|
|
NKBP |
|
|
|
|
|
|
Non GAAP Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months
2011 |
Nine Months
2012 |
3Q 2011 |
3Q
2012 |
|
(RMB'000) |
(RMB'000) |
(USD$'000) |
(RMB'000) |
(RMB'000) |
(USD$'000) |
|
|
|
|
|
|
|
GAAP Net Income |
32,716 |
13,703 |
2,180 |
7,613 |
2,513 |
400 |
|
|
|
|
|
|
|
Adjusting |
|
|
|
|
|
|
Foreign Exchang Loss/(Gain) |
4,475 |
(362) |
(58) |
1,579 |
(100) |
(16) |
ESOP |
5,972 |
191 |
30 |
3,868 |
0 |
0 |
ASC 740 adjustment |
0 |
3,107 |
494 |
0 |
1,607 |
256 |
Privatization expense |
0 |
10,979 |
1,747 |
0 |
7,584 |
1,207 |
|
|
|
|
|
|
|
Non GAAP Net Income |
43,163 |
27,618 |
4,394 |
13,060 |
11,604 |
1,846 |
CONTACT: China Nuokang Bio-Pharmaceutical Inc.
Mr. Steven Duan
Vice President of Investor Relations
Email: dsz@nkbp.com
ICR, Inc.
Mr. Rob Koepp
Tel: (+86) 10-6583-7516 or (646) 405-5180
Email: robert.koepp@icrinc.com
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