Biostar Pharmaceuticals, Inc. Announces First Quarter 2010 Financial Results
XIANYANG, China,
Pharmaceuticals, Inc. (Nasdaq: BSPM) (“Biostar” or “the Company”), a Xianyang-
based manufacturer of a leading over-the-counter Hepatitis B medicine, Xin
Aoxing Oleanolic Acid Capsules (“Xin Aoxing”), and a variety of pharmaceutical
products, today announced financial results of the first quarter ended
31, 2010
-- Q1 2010 revenue increased 66.0% to $12.4 million
-- Q1 gross margins were 77.0%, a 1,270-basis point improvement
-- Q1 2010 Non-GAAP adjusted net income increased 32.1% to $2.4 million
with adjusted EPS of $0.09
-- Biostar reiterates guidance for 2010: Revenue expected to be between
$80.0 to $82.0 million and net income between $18.0 to $20.0 million
SUMMARY FINANCIALS
First Quarter 2010 Results (unaudited)
Q1 2010 Q1 2009 CHANGE
Net Sales $12.4 million $7.4 million +66.0%
Gross Profit $9.5 million $4.8 million +98.9%
GAAP Net Income $2.3 million $1.8 million +23.7%
Adjusted Non-GAAP Net
Income* $2.4 million $1.8 million +32.1%
GAAP EPS (Diluted) $0.08 $0.08 +0%
Adjusted Non-GAAP EPS
(Diluted)* $0.09 $0.08 +12.5%
* Excluding non-cash stock-based compensation charge of $0.2 million for
Q1 2010. For more information about the non-GAAP financial measures
contained in this press release, please see "About Non-GAAP Financial
Measures" below.
First Quarter 2010 Financial Results
Revenue for the first quarter of 2010 increased 66.0% to approximately
increase was primarily due to Biostar’s flagship product, Xin Aoxing Oleanolic
Acid Capsule (“Xin Aoxing”), which saw increased sales by 138.2% to
million
quarter of 2009. Sales of Xin Aoxing represented 74.4% of total revenues and
benefited from the expansion into the
first quarter of 2010, in addition to the implementation of a retail-direct
selling strategy to select high-volume pharmacies who accept direct shipments
from the Company’s Xianyang-based production facility. Another notable
contributor from Biostar’s portfolio was its Taohuasan Pediatrics Medicine,
which contributed
increase of 13.1% compared to
Company continued its expansion into rural communities in China with products
now being sold at the Company’s rural supply network of approximately 6,000
locations out of a target market which includes an estimated 10,000 total
locations.
Cost of goods sold for the three months ended
approximately
or 35.7% of revenues for the three months ended
for the first quarter of 2010 were
compared to
first quarter of 2009. The increase in gross margins was due to the increased
sales volumes of Xin Aoxing and Taohuasan as wells as lower raw material costs
for Xin Aoxing experienced in the first quarter of 2010. Gross profits
increased by 98.9% for the three months ended
the same period in 2009.
Operating expenses for the three months ended
approximately
in 2009. Selling and distribution cost increased 197% to
first quarter of 2010, compared to
The increase in selling cost is primarily due to
advertising and promotional efforts which included billboards, newsprints and
in-store advertising designed to drive sales in existing and new markets and
to promote brand awareness of Xin Aoxing. These increased sales activities
drove higher commissions and travel expenses, which increased
compensation charge of
not present for the same period in 2009.
Operating income for the first quarter of 2010 totaled approximately
million
2009. Operating margins were 25.3% and 31.0% for the first quarter of 2010 and
2009, respectively. The decrease was mainly attributed to the increase of SG&A
in the first quarter of 2010. Excluding the non-cash equity compensation
charge of
operating income for the first quarter is
of 26.6%.
Net income was approximately
23.7% increase compared to
earnings per share were
for the first quarter of 2009, based upon 27.3 million and 23.5 million
diluted common shares outstanding, respectively. Adjusted Non-GAAP net income
for the first quarter was
based on 27.3 million diluted common shares outstanding for the first quarter
of 2010. The Company’s effective tax rate was at 27.6% for the first quarter
of 2010.
“We are pleased to report another quarter of strong revenue growth, as
Biostar gains further brand recognition and awareness for our Xin Aoxing
Capsules. With momentum in several key markets, we are confident that this
flagship product is becoming known as one of the major medical treatments for
Hepatitis B in China,” commented
Officer of Biostar. “We are optimistic that with our continued expansion into
new markets, supported by comprehensive marketing and distribution strategies,
including direct sales, we are in position to leverage our product portfolio
for optimal growth.” Wang concluded.
Balance Sheet and Cash Flow
Cash and cash equivalents totaled
to
approximately
million
The Company had a current ratio of 5.7 to 1 and stockholders’ equity of
million
million
For the first three months of 2010, the Company generated
cash from operations versus
same period in 2009.
Business Developments
As of
approximately 6,000 sales outlets.
On
product, Xin Aoxing, was to be suspended from selling by the local State Food
and Drug Administration (SFDA) due to non-compliance with approved advertising
use.
On
on the NASDAQ Global Market and commenced trading under the ticker symbol BSPM.
On
clinical trials for Zushima Analgesic Aerosol Spray (“Zushima”). Zushima is a
traditional Chinese herbal product used to relieve pain through a topical
application of the medicine to affected areas or closed wounds. Zushima spray
can also be used in the treatment of certain rheumatic conditions. The product
was classified as “Specially Needed Drug” by the Chinese Military Drug
Administration and will also be available to the public.
On
Xi’an Mei pude Bio-Technology Co., Ltd., a
nutrients manufacturer (“Meipude”). Biostar is working on a production
marketing program and anticipates starting sales using the acquired assets in
Conference Call
The Company will host a conference call to discuss the 2010 first quarter
financial results on
participants should call +1-877-941-4775 within
480-629-9763 if calling internationally. The conference ID is 4302147. It is
advisable to dial in approximately 5-10 minutes prior to
call is being web cast by ViaVid Broadcasting and can be accessed at ViaVid’s
website at http://www.viavid.net or at the following link:
http://viavid.net/dce.aspx?sid=00007582 . To access the web cast, you will
need to have the Windows Media Player on your desktop. For the free download
of the Media Player please visit:
http://www.microsoft.com/windows/windowsmedia/en/download/default.asp .
About Biostar Pharmaceuticals, Inc.
Biostar Pharmaceuticals, Inc., through its wholly-owned subsidiary in
China, develops, manufactures and markets pharmaceutical and medical nutrient
products for a variety of diseases and conditions. The Company’s most popular
product is its Xin Ao Xing Oleanolic Acid Capsule, an over-the-counter (“OTC”)
medicine for chronic hepatitis B, a disease affecting approximately 10% of the
Chinese population. In addition to its hepatitis product, Biostar manufactures
two broad-based OTC products, two prescription-based pharmaceuticals and
thirteen nutrients. The Company has adopted international standards and is in
the process of applying for two patents.
Safe Harbor
Certain statements in this release concerning our future growth prospects
are forward-looking statements, within the meaning of Section 27A of the U.S.
Securities Act of 1933, as amended, and Section 21E of the U.S. Securities
Exchange Act of 1934, as amended, which involve a number of risks and
uncertainties that could cause actual results to differ materially from those
in such forward-looking statements. The risks and uncertainties relating to
these statements include, but are not limited to, risks and uncertainties
regarding the success of our investments, risks and uncertainties regarding
fluctuations in earnings, our ability to sustain our previous levels of
profitability including on account of our ability to manage growth, intense
competition, wage increases in China, our ability to attract and retain highly
skilled professionals, time and cost overruns on fixed-price, fixed-time frame
contracts, client concentration, our ability to successfully complete and
integrate potential acquisitions, withdrawal of governmental fiscal incentives,
political instability and regional conflicts and legal restrictions on raising
capital or acquiring companies outside China. Additional risks that could
affect our future operating results are more fully described in our United
States Securities and Exchange Commission filings including our S-1 dated
27, 2008
2009
These filings are available at http://www.sec.gov . We may, from time to time,
make additional written and oral forward-looking statements, including
statements contained in our filings with the Securities and Exchange
Commission and our reports to shareholders. We do not undertake to update any
forward-looking statements that may be made from time to time by or on our
behalf.
About Non-GAAP Financial Measures
To supplement the Company’s consolidated financial statements, which
statements are prepared and presented in accordance with GAAP, we use the
following non-GAAP financial measures: non-GAAP adjusted net income, and non-
GAAP adjusted EPS. The presentation of this financial information is not
intended to be considered in isolation or as a substitute for, or superior to,
the financial information prepared and presented in accordance with GAAP. The
Company uses these non-GAAP financial measures for financial and operational
decision making and as a means to evaluate period-to-period comparisons.
Management believes that these non-GAAP financial measures provide meaningful
supplemental information regarding the Company’s performance and liquidity by
excluding certain expenses and expenditures that may not be indicative of
“recurring core business operating results”, meaning operating performance
excluding non-cash amortization charges for intangibles.
that both management and investors benefit from referring to these non-GAAP
financial measures in assessing performance and when planning, forecasting and
analyzing future periods. These non-GAAP financial measures also facilitate
management’s internal comparisons to historical performance and liquidity as
well as comparisons to competitors’ operating results. The Company believes
these non-GAAP financial measures are useful to investors both because (1)
they allow for greater transparency with respect to key metrics used by
management in its financial and operational decision making and (2) they are
used by our institutional investors and the analyst community to help them
analyze the health of the business.
For further information, contact:
Ms. Elaine Zhao, CFO
Tel: +1-626-456-2789
Email: elainezhao@biostarpharmaceuticals.com
John Mattio
HC International, Inc.
Tel: US +1-203-616-5144
Email: john.mattio@hcinternational.net
Web: http://www.hcinternational.net
BIOSTAR PHARMACEUTICALS, INC.
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2010 2009
(Unaudited) (Audited)
ASSETS
Current Assets
Cash and cash equivalents $8,642,418 $8,577,704
Accounts receivable 20,837,401 19,803,434
Inventories 564,955 340,078
Prepaid expenses and other receivables 1,487,143 1,500,327
Total Current Assets 31,531,917 30,221,543
Deposits 877,693 1,316,328
Property, plant and equipment, net 5,202,236 4,340,917
Intangible assets, net 11,314,977 11,131,681
Total Assets $48,926,823 $47,010,469
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable and accrued expenses $4,005,676 $3,559,281
Value-added tax payable 628,908 1,050,051
Income tax payable 920,079 1,481,266
Total Current Liabilities 5,554,663 6,090,598
Commitment and contingencies
Stockholders' Equity
Series B, convertible preferred
stock, $0.001 par value, 5,000,000 shares
authorized, 1,467,317 and 3,060,000
shares issued and outstanding at March 31,
2010 and December 31, 2009 1,467 3,060
Common stock, $.001 par value, 100,000,000
shares authorized, 25,820,119 and
23,374,799 shares issued and outstanding
at March 31, 2010 and December 31, 2009 25,820 23,375
Additional paid-in capital 19,992,542 19,801,366
Statutory reserve 3,119,132 2,860,685
Retained earnings 19,553,544 17,548,676
Accumulated other comprehensive income 679,655 682,709
Total Stockholders' Equity 43,372,160 40,919,871
Total Liabilities and Stockholders'
Equity $48,926,823 $47,010,469
BIOSTAR PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
Three Months Ended March 31,
2010 2009
Sales, net $12,363,175 $7,447,664
Cost of sales 2,840,426 2,658,807
Gross profit 9,522,749 4,788,857
Operating expenses:
Selling and distribution 5,609,561 1,888,182
General and administrative 625,722 591,802
Stock-based compensation 154,490 --
Total operating expenses 6,389,773 2,479,984
Income from operations 3,132,976 2,308,873
Other Income (Expense)
Interest income 3,686 310
Other expense (6,131) --
Foreign exchange loss (5,641) --
Total Other Income (Expense) (8,086) 310
Income before income taxes 3,124,890 2,309,183
Provision for income taxes 861,575 480,151
Net income $2,263,315 $1,829,032
Net income per common stock
Basic $0.09 $0.08
Diluted $0.08 $0.08
Weighted average number of common
stocks outstanding
Basic 25,129,674 23,240,899
Diluted 27,341,138 23,509,458
BIOSTAR PHARMACEUTICALS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
Three Months Ended March 31,
2010 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $2,263,315 $1,829,032
Adjustments to reconcile net income to
net cash provided by (used in) operating
activities:
Depreciation and amortization 138,403 166,269
Stock-based compensation 154,490 --
Changes in operating assets and liabilities:
Accounts receivable (1,030,791) (2,123,128)
Inventories (224,825) 11,535
Prepaid expenses and other receivables 13,420 (387,054)
Accounts payable and accrued expenses 248,346 371,398
Customer advances -- (36,193)
VAT payable (421,316) 37,044
Income tax payable (561,431) 66,487
Net cash provided by (used in) operating
activities 579,611 (64,610)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (281,542) --
Acquisition of proprietary technologies (265,153) --
Net cash used in investing activities (546,695) --
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of common stock 37,537 --
Net cash provided by financing activities 37,537 --
Effect of exchange rate changes on
cash and cash equivalents (5,739) 939
Net Increase (Decrease) in cash and
cash equivalents 64,714 (63,671)
Cash and cash equivalents, beginning
balance 8,577,704 758,316
Cash and cash equivalents, ending
balance $8,642,418 $694,645
SUPPLEMENTAL DISCLOSURES:
Interest payments $-- $--
Income tax payments $1,423,006 $413,665
SUPPLEMENTAL DISCLOSURES OF NON-CASH
INVESTING AND FINANCING ACTIVITIES:
Conversion of preferred stock to common
stock $1,593 $--
Cashless exercise of warrants $815 $--
Prior year deposit paid for acquisition
of property and equipment $438,851 $--
Payable for acquisition of property and
equipment and intangible assets $197,483 $--
SOURCE Biostar Pharmaceuticals, Inc.