GUANGZHOU, China, Aug. 14 /Xinhua-PRNewswire-FirstCall/ --
Second Quarter Highlights:
-- Revenue increased 105% to $8.3 million
-- Operating income increased 313% to $1.4 million
-- Net Income increased 328% to $1.1 million or $0.08 per diluted share
-- First six months revenue increased 70.2% to $13.4 million with EPS of
$0.15
China Medicine Corporation ("CMC") (OTC Bulletin Board: CHME), a leading distributor of prescription and over the counter pharmaceutical products, traditional Chinese medicines (finished medicines made of Chinese herbs), Chinese herbs, nutritional supplements, dietary supplements, medical supplies (revenue generated from the above business line is referred to as "Product Sales") and medical formulations (revenue generated from the sale of medical formulations is referred to as "Medical Formula Sales") today announced financial results for the second quarter ending June 30, 2007.
Revenue for the second quarter of 2007 increased 104.5 percent to $8.3 million compared to $4.0 million in 2006. Product Sales increased 95.2 percent during the quarter to $7.8 million with the year over year increase primarily related to the Company securing exclusive distribution rights to over 100 new drugs within the Guangdong Province in the first quarter of 2007. During the second quarter Iopamidol, a traditional pharmaceutical used for stomach radiography, was the largest component of Product Sales and represented approximately 13 percent of total revenue with the Company's top five products totaling $3.6 million or 43 percent of revenue.
Sales of proprietary products totaled $0.4 million for the second quarter 2007, representing an 8.1 percent increase from the same period last year with Levocarnitine, a traditional pharmaceutical used in cardiac muscle disease, accounting for 50 percent of this revenue. Sales of products for which the Company has exclusive distribution rights totaled $2.6 million in the second quarter, an increase of 61.5 percent from the second quarter of last year. Medical Formula Sales increased nearly seven-fold to $0.5 million from last year and 138 percent sequentially as the Company benefited from a large sale to a customer. During the second quarter the Company's top five customers accounted for $2.5 million or 30 percent of total revenue.
"We are pleased with our second quarter results as we continue to execute our business plan by both increasing our exclusive drug distribution portfolio while also expanding sales of proprietary products which have a positive impact on our overall level of profitability," commented Mr. Yang Senshan, CEO & President of CMC. "The over 700 drugs we gained exclusive rights to distribute back in April contributed nearly $3 million in revenue during the quarter and reinforce our ability to gain access to the most sought after drugs in the market while delivering adequate sell through to our expansive customer base."
Sales of prescription and over the counter medicines totaled $4.4 million during the second quarter, a 62.6 percent increase with over the counter medicines accounting for $2.3 million. Traditional Chinese Medicines sales were $3.1 million up 152.7 percent as compared to last year. Gross profit for the second quarter of 2007 increased 122.6 percent to $2.4 million resulting in gross margins of 29.1 percent for the second quarter of 2007 compared to 26.7 percent for the second quarter of last year with the primary improvement related to the new products obtained in 2007 which carry higher margins in addition to a larger contribution from Medical Formula Sales.
Operating income was $1.4 million for the quarter, an increase of 313.2 percent compared to the $0.3 million in 2006 with operating margins of 17.5 percent and 8.7 percent respectively. Net income increased 317.4 percent to $1.1 million with earnings per weighted average fully diluted share increasing 100 percent to $0.08 as compared to $0.3 million in net income and earnings of $0.04 per weighted average per fully diluted share in the second quarter of 2006 based on 14.2 million and 7.5 million shares respectively. During the second quarter 2007 the Company had an effective income tax of 23.5 percent, which was relatively unchanged versus last year in addition to a Value Added Tax (VAT) of 17.0 percent, which is deducted before reported revenues. On June 30, 2007 the Company had approximately 19.5 million fully diluted shares outstanding.
For the first six months of 2007 revenues increased 70.2 percent to $13.4 million from $7.8 million for the first half of 2006. Revenues from Product Sales were $12.6 million, an increase of 68.9 percent from the $7.5 million for the first half of 2006 with Medical Formula Sales increasing 97.4 percent to $0.7 million. Gross profit for the first six months of 2007 totaled $4.1 million compared to $2.4 million for the same period last year, an increase of 68.5 percent with gross margins relatively unchanged. Operating income increased 192.5 percent to $2.4 million with operating margins increasing 7.4 percent to 17.8 percent. During the first six months of 2006 the Company incurred $0.3 million in non-cash charges related to one time reverse merger expenses compared to no such expense this year. Net income increased 240.9 percent to $1.9 million with weighted average per fully diluted share increasing 114.3 percent to $0.15 as compared to $0.6 million and $0.07 last year.
"The second half of our calendar year is generally the strongest as customers build inventory to meet rising demand as we enter the winter season and approach the Chinese New Year," continued Mr. Yang. "With our broadened product portfolio we are well positioned to capitalize on this trend and anticipate that revenues and net income will show meaningful increases during the second half of this year compared to the first."
China Medicine ended the quarter with $2.7 million in cash compared to $0.4 million at the end of 2006. During the second quarter cash used in operations was $3.1 million due to the increase in inventory and advances to suppliers as the Company prepares for the seasonal increase in demand. Accounts receivable were $6.7 million and were slightly lower than the $7.0 million from the end of 2006, and are held with long-term customers. Working capital at the end of the quarter was $20.9 million as compared to $12.8 million on December 31, 2006 with shareholder equity increasing 63.6 percent from the end of 2006 to $21.5 million. During the second quarter, the Company received $2.9 million in warrant proceeds. The Company has approximately 4.1 million warrants and 1.4 million options outstanding which if exercised would bring the Company over $11.0 million in additional cash.
"We continue to make strides as it relates to expanding our proprietary product offering, specifically our Yutain Capsule which is a Traditional Chinese Medicine used to treat lung cancer," continued Mr. Yang. "We expect to apply for a clinical trial with the SFDA in the near term and our team is very encouraged by the initial results and potential market size."
Mr. Yang concluded, "The acquisition environment in China remains robust as there are many under capitalized companies that possess significant assets both from a proprietary product standpoint and manufacturing presence. We will continue to evaluate potential acquisitions as we look to add these key components to our business which we believe over time will strengthen our competitive positioning while enhancing our overall profitability."
About China Medicine Corporation
China Medicine is a distributor of prescription and over the counter pharmaceutical products, traditional Chinese medicines (finished medicines made of Chinese herbs), Chinese herbs, nutritional supplements, dietary supplements, medical supplies and medical formulations to over 28 provinces and 800 customers within China. The Company sells more than 2,200 products and is actively building a pipeline of proprietary traditional and Chinese herbal remedy products targeting oncology, high blood pressure and the removal of Aflatoxins from food and animal feed. For more information visit the Company's website at http://www.chinamedicinecorp.com .
Safe Harbor Statement
This press release contains forward-looking statements concerning China Medicine Corporation's business and products. The actual results may differ materially depending on a number of risk factors including, but not limited to, the following: general economic and business conditions, development, shipment, market acceptance, additional competition from existing and new competitors, changes in technology, and various other factors beyond its control. All forward-looking statements are expressly qualified in their entirety by this Cautionary Statement and the risks factors detailed in the Company's reports filed with the Securities and Exchange Commission. China Medicine Corporation undertakes no duty to revise or update any forward-looking statements to reflect events or circumstances after the date of this release.
CHINA MEDICINE CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2007 AND DECEMBER 31, 2006
ASSETS
June 30, December 31,
2007 2006
Unaudited
CURRENT ASSETS
Cash $ 2,702,678 $ 371,480
Accounts receivable, trade,
net of allowance for doubtful
accounts of $34,897 and $34,021 as
of June 30, 2007 and December 31,
2006, respectively 6,694,741 7,034,911
Inventories 4,449,652 1,900,467
Advances to suppliers 7,538,518 4,077,412
Other current assets 59,140 42,136
Total current assets 21,444,729 13,426,406
EQUIPMENT, net 1,340,984 1,215,311
OTHER ASSETS - Intangible
assets 132,711 682
Total assets $ 22,918,424 $ 14,642,399
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable, trade $ 163,411 $ 188,877
Other payables - related
parties -- 30,000
Other payables and accrued
liabilities 91,673 23,265
Customer deposits 175,688 17,980
Taxes payable 58,471 295,902
Liquidated damages payable 44,003 44,003
Total liabilities 533,246 600,027
MINORITY INTEREST 898,547 908,480
SHAREHOLDERS' EQUITY
Preferred stock, $0.0001 par
value; 10,000,000 shares
authorized,
606,255 shares issued and
outstanding at June 30,
2007 and
2,340,000 shares issued and
outstanding at December 31,
2006 61 234
Common stock, $0.0001 par
value; 90,000,000 shares
authorized,
13,306,738 shares issued
and outstanding at June 30,
2007 and
8,160,000 shares issued and
outstanding at December 31,
2006 1,331 816
Paid-in capital 10,344,038 4,396,971
Deferred Compensation (44,850) --
Contribution receivable (961,500) (961,500)
Statutory reserves 1,345,206 1,345,206
Retained earnings 9,870,097 7,979,242
Accumulated other
comprehensive income 932,248 372,923
Total shareholders' equity 21,486,631 13,133,892
Total liabilities and
shareholders' equity $ 22,918,424 $ 14,642,399
CHINA MEDICINE CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME
(Unaudited)
FOR THREE MONTHS ENDED FOR SIX MONTHS ENDED
2007 2006 2007 2006
REVENUES
Product sales $ 7,764,535 $ 3,977,960 $ 12,647,744 $ 7,489,939
Medical formula
sales 499,433 63,121 709,219 359,224
Total revenues 8,263,968 4,041,081 13,356,963 7,849,163
COST OF GOOD SOLD 5,859,008 2,960,726 9,264,425 5,420,276
GROSS PROFIT 2,404,960 1,080,355 4,092,538 2,428,887
OPERATING EXPENSES
Research and
development 543 184,677 100,655 239,341
Selling, general
and administrative 960,924 546,287 1,604,770 1,049,755
Reverse
acquisition -- -- -- 323,770
Total operating
expenses 961,467 730,964 1,705,425 1,612,866
INCOME FROM
OPERATIONS 1,443,493 349,391 2,387,113 816,021
OTHER INCOME
(EXPENSE), NET (7,118) 2,380 (10,090) (7,112)
INCOME BEFORE
INCOME TAXES 1,436,375 351,771 2,377,023 808,909
AND MINORITY
INTEREST
PROVISION FOR
INCOME TAXES 338,326 88,676 538,285 254,257
INCOME BEFORE
MINORITY INTEREST 1,098,049 263,095 1,838,738 554,652
MINORITY INTEREST 29,085 -- 52,117 --
NET INCOME 1,127,134 263,095 1,890,855 554,652
OTHER
COMPREHENSIVE
INCOME
Foreign currency
translation
adjustment 559,325 26,858 559,325 71,623
COMPREHENSIVE
INCOME $ 1,686,459 $ 289,953 $ 2,450,180 $ 626,275
Earning per share
- basic $ 0.09 $ 0.04 $ 0.18 $ 0.08
Earning per share
- diluted 0.08 0.04 $ 0.15 $ 0.07
Weighted average
number of shares
outstanding -
basic 12,160,111 7,186,389 10,692,414 7,186,389
Weighted average
number of shares
outstanding -
diluted 14,232,457 7,471,339 12,764,759 7,471,339
For more information, please contact:
China Medicine Corporation
Mary Xia
Tel: +86-732-438-8866
Email: mary66882002@yahoo.com
Investors:
Matt Hayden, Hayden Communications
Phone: +1-858-704-5065
Email: matt@haydenir.com
