Biostar Pharmaceuticals, Inc. Announces 2012 Third Quarter Financial Results 2012 Third Quarter Net Sales Increase by 22% vs. 2012 Second Quarter Net Sales to Continue to Gradually Recover in the Coming Months PR Newswire XIANYANG, China, Nov. 19, 2012 XIANYANG, China, Nov. 19, 2012 /PRNewswire/ -- Biostar Pharmaceuticals, Inc. (NASDAQ GM: BSPM) ("Biostar" or "the Company"), a PRC-based manufacturer and marketer of pharmaceutical and health supplement products in China for a variety of diseases and conditions, today announced its financial results for the third quarter and nine months ended September 30, 2012. Biostar's overall results continued to be affected by the temporary PRC government imposed suspension of gel capsule sales earlier this year. Third Quarter 2012 vs. Third Quarter 2011^* oNet sales decreased to $10.0 million from $24.8 million; oGross margin decreased to 52.6% as compared to 69.9%; oLoss from operations was $5.8 million, as compared to income from operations of $5.9 million; and, oThe net loss was $5.9 million, or $0.63 per diluted share, as compared to net income of $4.5 million, or $0.47 per diluted share. Nine Months 2012 vs. Nine Months 2011^* oNet sales decreased to $34.0 million from $66.0 million; oGross margin decreased to 60.7% as compared to 71.1%; oLoss from operations was $14.8 million, as compared to income from operations of $15.6 million; and, oThe net loss was $13.3 million, or $1.41 per diluted share, as compared to net income of $11.3 million, or $1.22 per diluted share. *Per share amounts for both periods reflect the reverse split effective April 3, 2012. Net Sales by Product/Facility Xin Aoxing product Hospital products $ in millions ^(1) All other Xianyang Weinan Facility ^(3) Facility products For the nine month period (at Xianyang ^(1) products ^(2) (at Xianyang ended 9/30 Facility) Facility) 2012 2011 %change 2012 2011 %change 2012 2011 %change 2012 2011 %change NetSales $16.3 $44.5 (63.4%) $11.1 $21.5 (48.2%) $5.3 - 100% $1.3 - 100% % of Total Net Sales 47.9% 67.5% 32.8% 32.5% 15.5% - 3.8% - (1) Biostar's products are manufactured at two facilities: Xianyang and Weinan. Xin Aoxing, the Company's flagship product, is manufactured at the Xianyang facility. (2) There were no sales reported in the third quarter and nine months of 2011 because the Weinan facility was acquired in October 2011. (3) Products manufactured at the Xianyang facility and exclusively sold to Xijing Hospital, as per an agreement signed in September 2012. Ronghua Wang, Biostar's Chief Executive Officer and Chairman commented, "Although as expected, our 2012 third quarter overall results were below those of the 2011 third quarter, our business has shown signs of recovery and net sales for the current quarter increased by approximately $1.8 million, or 22% as compared to the 2012 second quarter. "Following a temporary industry-wide suspension of gel capsules sales earlier this year by the State Food and Drug Administration (SFDA), on July 30, 2012, we received the "green-light" approval from Xianyang SFDA authorities to restart sales of gel capsule products. In anticipation of the receipt of the approval, our management team met to design, develop and implement a plan to accelerate the recovery of our business. As a result, we: oRamped up production by adding a second shift; oInitiated an aggressive advertising campaign to rebuild consumer and physician confidence in our products and established incentives for the sales force in all distribution offices nationwide; oIn early September, we added a new dimension to our sales model by establishing a Business-to-Customer (B2C) call center, which is currently operational; and, oIncreased efforts to complete several experimental tests for Xijing Hospital, which resulted in the signing of two one-year contracts valued at approximately $3.6 million and $3.0 million, respectively, to manufacture a total of eight drugs specifically for the needs of Xijing Hospital." Mr. Wang continued, "Net sales for the 2012 third quarter and nine month periods of our flagship gel capsule product Xin Aoxing substantially decreased as did net sales for all other gel capsule products. However, that was partially offset by: 1.Net sales of approximately $1.3 million in 2012 third quarter resulting from shipments to Xijing Hospital. 2.Net sales from our Weinan facility which accounted for approximately $2.0 million or 19.7% and approximately $5.3 million or 15.5% of sales for the 2012 third quarter and nine month period, respectively. The Weinan facility was acquired during the fourth quarter of 2011 hence there were no sales recorded in the 2011 periods. "Gross margin for the 2012 third quarter and nine month periods declined mainly due to substantially lower net sales for Xin Aoxing, which historically has been our highest margin product. Also our gross margin for both periods was negatively affected by lower selling prices due to fierce competition and by the PRC government's essential drug list price control policy. "As a percentage of net sales, 2012 third quarter selling expenses and general expenses increased to approximately 60% and 26%, respectively as compared to approximately 42% and 4%, respectively, in the same period of 2011, mainly due to lower sales. Similarly, selling expenses and general expenses as percentage of net sales for the 2012 nine month period, increased as compared to the same period of 2011. R&D expenses for the 2012 third quarter and nine months accounted for 8% and 7% of total net sales, respectively. Of note, in 2012 we reclassified long-term deposits into current assets and amortized R&D quarterly; we did not incur quarterly R&D expenses in 2011, as R&D expense was recorded as a long-term deposit at December 31, 2011. Additionally, in the 2012 third quarter, we paid the local government a one-time, non-appealable administrative penalty of approximately $1.6 million related to the gel capsule incident." Biostar's CFO, Zack Pan noted, "Our balance sheet remains strong. Total current assets at September 30, 2012 were $48.6 million vs. total current liabilities of $4.2 million for a 12:1 current ratio. We continue to fund our business from our free cash flow. As of September 30, 2012, we had cash and cash equivalents of approximately $12.1 million compared with approximately $17 million at 2011 year-end." Mr. Wang concluded, "Despite the temporary setback, our business remains solid. We are confident that as a result of our efforts, our sales will continue to gradually recover in the coming months. Based on net sales recorded for the month of October and first half of November, and we expect 2012 fourth quarter sales to be significantly higher than 2012 third quarter." Conference Call Biostar's Chairman and CEO, Ronghua Wang and CFO, Zack Pan will host a conference call on Monday, November 19, 2012 at 9:30 am ET / 10:30 pm China time to discuss these results as well as recent corporate developments. Live conference call details Interested parties may participate in the call by dialing (480) 629-9712. Please call in 10 minutes before the conference is scheduled to begin and ask for the Biostar call or use pass code 4576907. After opening remarks, there will be a question and answer period. Questions may be asked during the live call, or alternatively, you may e-mail questions in advance to firstname.lastname@example.org. Webcast The conference call will also be broadcast live over the Internet. To listen to the webcast, please go to http://public.viavid.com/index.php?id=102669 or visit Biostar's website http://www.biostarpharmaceuticals.com and then to the Event Calendar page where the conference call is posted. Please go to the website at least 15 minutes early to register, and download and install any necessary audio software. If you are unable to listen live, the conference call will be archived and can be accessed for approximately 90 days. We suggest listeners use Microsoft Internet Explorer as their web browser. Replay A replay will be available until 11:59 pm E.T. on November 26, 2012. To listen, please call (858) 384-5517 and use pass code 4576907. About Biostar Pharmaceuticals, Inc. Biostar Pharmaceuticals, Inc., through its wholly owned subsidiary and controlled affiliate in China, develops, manufactures and markets pharmaceutical and health supplement products for a variety of diseases and conditions. The Company's most popular product is its Xin Aoxing Oleanolic Acid Capsule, an over-the-counter ("OTC") medicine for chronic hepatitis B, a disease affecting approximately 10% of the Chinese population. For more information please visit: http://www.biostarpharmaceuticals.com. Safe Harbor relating to the Forward-Looking Statements 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 company uses words and phrases such as "guidance," "forecasted," "projects," "is expected," "remain confident," "will" and similar expressions to identify forward-looking statements in this press release, including forward-looking statements. Undue reliance should not be placed on forward-looking information. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks, which could cause actual results to vary and in some instances to differ materially from those anticipated by Biostar and described in the forward-looking information contained in this news release. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding the Company's ability to recover its sales following the SFDA investigation in the 3^rd quarter of 2012 and for the year ended, the Company's ability to integrate the recently acquired Shaanxi Weinan product lines into the Company's current product line and current operations, the state of consumer confidence and market demand or the Company's products, 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 most recent Annual Report on Form 10-K for the year ended December 31, 2011, and other subsequent filings. These filings are available at 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. For more information contact: BioStar Pharmaceuticals, Inc. The Equity Group, Inc. Zack Pan, CFO Lena Cati Tel: 405-996-8829 Tel: 212 836-9611 Email: email@example.com Email: firstname.lastname@example.org ~FINANCIAL TABLES FOLLOW~ BIOSTAR PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) Three Months Ended Nine Months Ended September 30, September 30, 2012 2011 2012 2011 Sales, net $ 9,969,375 $ 24,779,420 $ 34,028,164 $ 65,980,481 Costofsales 4,729,894 7,465,966 13,379,287 19,352,264 Gross profit 5,239,481 17,313,454 20,648,877 46,628,217 Operating expenses: Selling expenses 6,009,227 10,391,335 18,498,671 26,908,239 General and administrative expenses 2,640,240 983,778 5,124,789 4,103,154 Credits for negative publicity - - 7,904,513 - Administrative penalty 1,596,174 - 1,596,174 - Research and development expenses 789,702 - 2,370,605 - Total operating expenses 11,035,343 11,375,113 35,494,752 31,011,393 (Loss) Income from operations (5,795,862) 5,938,341 (14,845,875) 15,616,824 Other income (expense) Interest income 55,642 127,423 247,342 271,737 Interest expense (1,059) (2,984) (33,193) (10,371) Other income 152 273 598 821 Total other income (expenses) 54,735 124,712 214,747 262,187 (Loss) Income before income taxes (5,741,127) 6,063,053 (14,631,128) 15,879,011 Income tax expenses (benefits) 198,508 1,599,316 (1,376,356) 4,539,127 Net (loss) income (5,939,635) 4,463,737 (13,254,772) 11,339,884 Other comprehensive income Foreign currency translation adjustment (117,289) 640,119 180,992 1,733,586 Total comprehensive (loss) income $ (6,056,924) $ 5,103,856 $ (13,073,780) $ 13,073,470 (Loss) Earnings per share, on net income Basic $ (0.63) $ 0.47 $ (1.41) $ 1.22 Diluted $ (0.63) $ 0.47 $ (1.41) $ 1.22 Weighted average number of common stock outstanding Basic 9,490,506 9,398,876 9,430,532 9,264,104 Diluted 9,490,506 9,398,876 9,430,532 9,264,104 BIOSTAR PHARMACEUTICALS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS September30, December 31, 2012 2011 (Unaudited) ASSETS Current Assets Cash and cash equivalents $ 12,119,565 $ 16,971,789 Accounts receivable 28,815,263 35,033,650 Inventories 985,274 1,373,459 Tax prepaid 451,121 - Prepaid expenses and other receivables 5,390,773 7,129,911 Prepaid research and development expenses 789,390 - Total Current Assets 48,551,386 60,508,809 Deposits - 3,148,466 Deferred tax assets 3,328,228 1,617,688 Property and equipment, net 7,038,982 7,379,982 Intangible assets, net 9,390,806 10,406,931 Total Assets $ 68,309,402 $ 83,061,876 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts and other payables $ 3,644,084 $ 3,334,418 Short-term bank loans - 787,116 Value-added tax payable 451,088 895,487 Income tax payable 92,677 1,643,155 Total Current Liabilities 4,187,849 6,660,176 Commitmentandcontingencies Stockholders' Equity Common stock, $0.001 par value, 100,000,000 shares authorized, 9,993,549 and 9,400,216 shares issued and outstanding as of 9,993 9,400 September 30, 2012 and December 31, 2011* Additional paid-in capital 23,238,700 22,445,660 Statutory reserve 6,490,600 6,490,600 Retained earnings 30,219,062 43,473,834 Accumulated other comprehensive income 4,163,198 3,982,206 Total Stockholders' Equity 64,121,553 76,401,700 Total Liabilities and Stockholders' Equity $ 68,309,402 $ 83,061,876 *Number of shares issued and outstanding retroactively reflects reverse stock split effective on April 3, 2012 SOURCE Biostar Pharmaceuticals, Inc. Website: http://www.biostarpharmaceuticals.com
Biostar Pharmaceuticals, Inc. Announces 2012 Third Quarter Financial Results
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